Paragraphs 5 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
This article is on the Handbook of Procedures only. The Foreign Trade Policy has no paragraph of its own for it; the block system is procedure that the Handbook sets under the EPCG export obligation of paragraph 5.01(b) and the conditions of paragraph 5.04 of the Policy. Paragraph 5.13 of the Handbook splits the specific obligation into two blocks, sets composition fees for extending the first block, and deals with older authorisations. Paragraph 5.14 asks for a report.
The procedure is taken from Chapter 5 of the Handbook of Procedures, 2023 as published on the DGFT website (file of July 2026), consulted on 2 October 2026. Later Public Notices should be checked. If a block has already lapsed on your file, our legal consultation service can look at the position with you.
Paragraph 5.13(a): while keeping the average export obligation, the holder fulfils at least 50% of the specific obligation in the first block (years 1 to 4) and the balance in years 5 and 6. A request to extend the first block goes in within 6 months of its expiry, with a composition fee of Rs. 5,000, Rs. 10,000 or Rs. 15,000 depending on the duty saved. If the first block is not met, duties of customs proportionate to the shortfall are payable within 6 months of its expiry, with interest. Paragraph 5.14 requires an online report after the first block.
Paragraph 5.13(a) and (b): the two blocks
| Period from the date of issue of the Authorisation | Minimum export obligation to be fulfilled |
|---|---|
| Block of 1st to 4th year | 50% |
| Block of 5th and 6th year | Balance EO |
The holder tells the Regional Authority (RA) about the fulfilment of the export obligation and of the average exports within three months of the completion of the block (sub-paragraph (b)). The 6-year frame is the one in paragraph 5.01(b) of the Policy; see our article on paragraphs 5.00 and 5.01.
Paragraph 5.13(c): extending the first block, and the composition fee
The composition fee depends on the duty saved value of the EPCG Authorisation issued. Three bands are printed: up to Rs. 2 Crores; more than Rs. 2 Crores to 10 Crores; above Rs. 10 Crores.
| When the request is made | Up to Rs. 2 Crores | More than Rs. 2 Crores to 10 Crores | Above Rs. 10 Crores |
|---|---|---|---|
| Within 6 months from the date of expiry of the first block | Rs. 5,000 | Rs. 10,000 | Rs. 15,000 |
| After 6 months but within 6 years from the date of issue (the RA "may consider") | Rs. 10,000 | Rs. 20,000 | Rs. 30,000 |
| Beyond 6 years, for regularisation (the RA "shall also consider") | Rs. 15,000 | Rs. 30,000 | Rs. 45,000 |
No refund of an earlier paid composition fee is admissible. Where the first block is not fulfilled under sub-paragraph (a), except where the RA has extended the first block, the holder must within 6 months from the expiry of the block pay duties of customs, with the applicable interest notified by the Department of Revenue, proportionate to the duty saved on the total unfulfilled obligation of the first block. A footnote in the chapter file records that paragraph 5.13(c) was amended by Public Notice 15/2024-25 dated 25.07.2024.
Paragraph 5.13(d) and (e): older authorisations
| Authorisations issued | Governed by |
|---|---|
| 1st April 2002 up to 31st August 2004 | paragraph 5.8 of HBP Vol.1 (RE-02), as amended from time to time |
| 1st September 2004 up to 17th April 2013 | paragraph 5.8 of HBP Vol.1 (RE-12), as amended till 17.04.2013 |
| 18th April 2013 till the issue of the Notification of FTP 2015-20 | paragraph 5.8 of HBP Vol. 1, as amended by Public Notice 1 dated 18.04.2013 |
| 1st April 2015 till 4th December 2017 | paragraph 5.14 of HBP, as amended by Public Notice 1 dated 01.04.2015 |
| 5th December 2017 till 31st March 2023 | paragraph 5.14 of HBP, as amended by Public Notice 43 dated 05.12.2017 |
Sub-paragraph (e) adds that, notwithstanding sub-paragraph (d), the extension and fee rule of sub-paragraph (c) also applies to authorisations issued under FTP 2015-20. A footnote records that sub-paragraph (e) was added by Public Notice 15/2024-25 dated 25.07.2024.
Paragraph 5.13(f): a dated relaxation that has lapsed
Sub-paragraph (f) says that, notwithstanding paragraph 5.13, where the block-wise export obligation period (original or extended) expires during 01.03.2026 to 31.05.2026, that period "shall stand automatically extended up to 31.08.2026". A footnote names Public Notice 51/2025-26 dated 06.03.2026. This is time-bound: its last date, 31.08.2026, has passed on the date of consultation, and it is not the standing rule. A block that ends outside those dates gets no such extension.
Paragraph 5.14: the report
After the first four-year block expires, and continuously until the valid export obligation period expires, the holder submits a report online to the RA. It carries a statement with details of shipping bill, invoice number, bill of export or FIRC number with date, as applicable, certified by a Chartered Accountant, Cost Accountant or Company Secretary, to evidence fulfilment of the specific and, where applicable, the average obligation. A footnote records an amendment by Public Notice 24 dated 20.09.2024.
Example with invented names
Arjun Precision Tools Pvt Ltd holds an EPCG Authorisation whose duty saved value falls in the band "more than Rs. 2 Crores to 10 Crores". At the end of year 4 it has met less than the 50% of the specific obligation required by paragraph 5.13(a). If it asks for an extension of the first block within 6 months of expiry, the composition fee is Rs. 10,000. If it asks later, but within 6 years from issue, the fee is Rs. 20,000, and the RA may consider it. If it neither gets an extension nor fulfils, it must pay customs duties with interest proportionate to the unfulfilled obligation within 6 months of the block's expiry. Either way it files the report of paragraph 5.14 with a certified statement.
What the Handbook does not say
The paragraph does not say what happens in the period between the first block's expiry and the RA's decision, and it names no form for the first-block extension request. This article states nothing beyond the words. The next stage, extension of the overall export obligation period, is in our article on paragraphs 5.15, 5.16 and 5.19. The Handbook is issued by the Director General under section 6 of the Foreign Trade (Development and Regulation) Act, 1992, and the Policy rests on section 5. For the counting rules, see paragraphs 5.04 and 5.08 of the Policy.
Need help with a lapsed or lapsing block?
A late request, a fee band that is not obvious or a shortfall that needs a clear strategy is better handled before the six-month window closes. Our legal consultation team can review the authorisation file and the export record with you.
Key takeaways
- Paragraph 5.13(a): 50% of the specific obligation in the first four years; the balance in years 5 and 6; the average obligation is kept.
- Paragraph 5.13(b): intimate the RA within three months of the end of the block.
- Paragraph 5.13(c): three fee bands, three request windows; no refund of an earlier fee.
- Unfulfilled first block without extension: proportionate customs duties with interest within 6 months.
- Paragraph 5.13(f) covered blocks expiring 01.03.2026 to 31.05.2026; its extended date of 31.08.2026 has passed.
- Paragraph 5.14: online report with a certified statement.
Read next
- Paragraphs 5.15, 5.16 and 5.19 of the Handbook of Procedures, 2023: extension of the EPCG export obligation period
- Paragraphs 5.04 and 5.08 of the Foreign Trade Policy, 2023: EPCG export obligation
- EPCG Scheme: Six Times Duty Saved, and the Average Export Obligation
- GST Refund Under the EPCG Scheme
Disclaimer: Based on the chapter-wise text of the Foreign Trade Policy, 2023 and the Handbook of Procedures, 2023 published on the DGFT website, and on the later Notifications named in this article, as consulted on 2 October 2026. The copies carry no "updated up to" date. Notifications, Public Notices, Trade Notices, the ITC(HS) schedules, Appendices and forms change often; the current text on the DGFT website should be checked before acting. This article is general information, not legal advice; check the official text before acting.