What Happened
- The Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce and Industry, issued Public Notice No. 51/2025-26 on March 6, 2026, automatically extending the Export Obligation (EO) period for specified authorisations under the Advance Authorization (AA) and Export Promotion Capital Goods (EPCG) schemes.
- The extension applies to all AA and EPCG authorisations where the export obligation period was due to expire between March 1, 2026, and May 31, 2026; these are now automatically extended to August 31, 2026.
- Crucially, no separate application needs to be filed, and no composition fee (penalty for extension) is payable — the extension is automatic and free.
- The relaxation was granted in response to disruptions to global trade and logistics caused by the ongoing geopolitical crisis in West Asia, which has disrupted shipping lanes, raised freight costs, and made export fulfilment within original timelines difficult.
- The measure provides exporters operational flexibility without penalising them for external shocks beyond their control.
Static Topic Bridges
Advance Authorization (AA) Scheme
The Advance Authorization (AA) scheme allows Indian exporters to import raw materials, inputs, and components duty-free — exempting them from Basic Customs Duty, IGST, and Compensation Cess — provided these inputs are used in producing goods for export. The scheme operates under the Foreign Trade Policy (FTP) and is governed by DGFT. It is a key instrument to enhance the competitiveness of Indian exports by reducing input costs. An Export Obligation (EO) must be fulfilled within a specified period (typically 18-24 months) from the date of issue of the authorisation.
- AA covers inputs on the basis of Standard Input Output Norms (SIONs), which specify the quantity of inputs allowed per unit of export product.
- Special variants include Advance Authorisation for Annual Requirement (for established exporters) and Special Advance Authorisation (for garments and made-ups under Appendix 4B).
- Non-fulfilment of EO results in duty demand with interest plus a composition fee (penalty); the 2026 relaxation waives the composition fee for the specified window.
- DGFT is the principal authority for FTP implementation; it functions under the Ministry of Commerce and Industry.
Connection to this news: The March 2026 relaxation extended the EO period for all AA authorisations expiring March-May 2026 to August 31 — a lifeline for exporters who imported duty-free inputs but could not complete exports due to shipping disruptions caused by the West Asia conflict.
Export Promotion Capital Goods (EPCG) Scheme
The EPCG scheme allows import of capital goods (machinery, equipment, technology) at zero or concessional customs duty for producing export-quality goods and services. In return, the importer must fulfil an Export Obligation of 6 times the duty saved (in CIF value of exports), typically over 6 years from the date of issue of the EPCG authorisation. The scheme is designed to upgrade India's export production infrastructure by making capital goods cheaper to procure.
- EPCG is available to manufacturers-exporters, merchant-exporters, and service providers.
- Export Obligation = 6× the duty saved on the capital goods imported under EPCG.
- Annual EO = 1/6th of total EO per year (block-wise fulfilment); the 2026 relaxation also extends block-wise EO period.
- Sectors commonly using EPCG: textiles/garments, engineering goods, chemicals, IT services hardware.
- EPCG was significantly liberalised under Foreign Trade Policy 2023-28, with a simplified EO fulfilment tracking mechanism.
Connection to this news: EPCG authorisations expiring between March-May 2026 also get automatic extension to August 31, 2026, without composition fee — allowing exporters to use imported capital goods longer to produce and export goods to meet their outstanding obligations.
Foreign Trade Policy (FTP) and India's Export Promotion Framework
India's Foreign Trade Policy is a five-year framework formulated by the Ministry of Commerce and Industry that governs all aspects of import-export. The current FTP (2023-28) was released in April 2023 and focuses on reaching $2 trillion in exports by 2030, with emphasis on Districts as Export Hubs, e-commerce exports, and MSME integration. DGFT administers FTP and issues Public Notices, Trade Notices, and Policy Circulars to implement and modify scheme provisions.
- FTP 2023-28 introduced several key changes: duty exemption on R&D imports, streamlined SION norms, and expansion of Remission of Duties and Taxes on Exported Products (RoDTEP) scheme coverage.
- India's merchandise export target for 2030: $1 trillion (goods) + $1 trillion (services) = $2 trillion total.
- Key export promotion schemes: AA, EPCG, RoDTEP (replaces MEIS), Duty Drawback, and Special Economic Zones (SEZs).
- West Asia (Gulf region) is a major destination for Indian exports — any conflict there directly impacts export fulfilment timelines and freight insurance costs.
Connection to this news: The March 2026 relaxation is a standard FTP tool — DGFT has precedent in using similar EO extensions during COVID-19 (2020-21) and other global supply chain disruptions. It reflects the government's policy of insulating exporters from force majeure events.
Key Facts & Data
- Authority: DGFT Public Notice No. 51/2025-26, dated March 6, 2026.
- Extension: AA and EPCG authorisations expiring March 1 – May 31, 2026 → now valid till August 31, 2026.
- No composition fee required; no separate application needed — automatic extension.
- Reason: Disruption to global trade and logistics from West Asia geopolitical developments (US-Israel strikes on Iran, 2026).
- EPCG Export Obligation = 6× duty saved; block-wise EO period also extended.
- AA: duty-free import of inputs for export production; EO typically 18-24 months from authorisation date.
- FTP 2023-28: India's merchandise + services export target = $2 trillion by 2030.
- Similar relief was extended during COVID-19 disruption (2020-21), establishing a policy precedent.