In India’s fast-evolving export ecosystem, government-backed schemes play a crucial role in making businesses globally competitive. Two such important instruments are the Advance License EODC and the Export Promotion of Capital Goods Scheme (EPCG). Both are designed to reduce input costs for exporters and promote high-value manufacturing for export markets.
What is Advance License EODC?
The Advance License, now formally known as the Advance Authorization Scheme, allows exporters to import raw materials, components, or inputs duty-free for manufacturing export products. However, after fulfilling export obligations, exporters must obtain the Export Obligation Discharge Certificate (EODC) to close the license.
EODC (Export Obligation Discharge Certificate) is a compliance document issued by the Directorate General of Foreign Trade (DGFT). It certifies that the exporter has fulfilled the export obligations linked to the duty exemptions received under the Advance License.
Without an EODC, the license remains open, and the importer may face penalties, interest liabilities, or even suspension of future import-export privileges. Timely application and submission of accurate documentation are critical to secure EODC clearance.
Key Features of Advance License EODC
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Duty-Free Imports: Raw materials required for export production can be imported without paying Basic Customs Duty, IGST, or Compensation Cess.
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Export Obligation: Exporters must fulfill a specific export obligation, generally calculated as a multiple of the duty saved on imports.
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Time-bound Compliance: The export obligation must be completed within the period specified in the license, typically 18 to 24 months.
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EODC Application: Once obligations are fulfilled, exporters apply to DGFT for the EODC by submitting proof of exports, shipping bills, Bank Realisation Certificates (BRC), and import documents.
How the Export Promotion of Capital Goods Scheme Complements Advance License
While the Advance License focuses on raw materials, the Export Promotion of Capital Goods Scheme (EPCG) targets capital goods needed for manufacturing exports. Under EPCG, exporters can import capital machinery at zero or reduced customs duty, provided they meet export obligations linked to the duty saved.
Together, Advance License and EPCG give Indian exporters a cost advantage by lowering both input and capital costs. This helps businesses scale up manufacturing capabilities, improve product quality, and become globally competitive.
Common Challenges and Solutions
Many exporters face challenges in securing the EODC due to documentation errors, mismatch of shipping details, or delays in BRC submission. To avoid complications:
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Maintain meticulous export and import records.
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Regularly reconcile shipping bills and export realization data.
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Submit EODC applications well before license expiry.
Professional consultants or experienced customs brokers can also assist in streamlining the EODC process.
Conclusion
The Advance License EODC and the Export Promotion of Capital Goods Scheme are powerful tools for exporters aiming to reduce costs and expand global reach. Understanding the compliance requirements and timely submission of documents ensures smooth closure of licenses and uninterrupted export operations.
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