Audit Raises Red Flags Over EPCG Scheme Implementation

A CAG audit report alerts of potential gaps in monitoring the EPCG scheme, which facilitates duty-free imports of capital goods for exports. The report highlights risks in the authorization process, improper fixation of export obligations, and the need for robust compliance measures to prevent misuse.

The latest audit by the Comptroller and Auditor General (CAG) has highlighted significant concerns regarding the Export Promotion Capital Goods (EPCG) scheme. This initiative, meant to foster exports by allowing duty-free import of capital goods, offers a prolonged period to achieve export obligations.

The report stresses potential misuse, noting that capital goods have been imported from unregistered ports, risking revenue loss due to the improper adherence to procedural norms. Authorities, including customs and regional offices, have been urged to intensify monitoring and enforce penalties for non-compliance.

Presented in Parliament, the audit comprises 72 observations and 26 recommendations, pointing to revenue implications of Rs 479.81 crore. Recommendations include reassessing online facilitation systems under the ease of doing business framework to enhance the scrutiny and veracity of submitted documents.

(With inputs from agencies.)