Export Oriented Units (EOU, Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) & Bio-Technology Parks (BTPs)

Objective:

Objectives of these schemes are to promote exports, enhance foreign exchange earnings, attract investment for export production & employment generation.

Unit undertaking to export their entire production of goods & services may be set up under the EOU scheme, EHTP scheme, STP scheme or BTP scheme for a manufacture of goods, including repair, re-making, re-engineering, development of software, etc. Trading units are not covered under this scheme.

Export and Import of Goods:

  • An EOU / EHTP / STP / BTP unit may export all kinds of goods & services except items that are prohibited in ITC (HS).
  • Procurement & supply of export promotion material like brochure / literature, pamphlets, hoardings, catalogues, posters etc up to a maximum value limit of 1.5% FOB value of previous year export shall also be allowed.
  • An EOU / EHTP / STP / BTP unit may import & / or procure, from DTA (Domestic Tariff Area) or bonded warehouse in DTA / International exhibition held in India, without payment of duty, all types of goods, including capital goods, required for its activities, provided they are not prohibited items of import in the ITC (HS).
  • State Trade regime shall not apply to EOU manufacturing units.

Second-hand capital goods:

Second-hand capital goods, without any age limit, may also be imported duty-free.

Net Foreign Exchange Earnings (NFE):

  • EOU / EHTP / STP / BTP unit shall be positive net foreign exchange earners i.e. Export should be more than import.
  • NFE earning shall be calculated cumulatively in the block of 5 years, starting from the commencement of production.
  • If unable to achieve NFE in 5 years, due to adverse market conditions, the 5 year block period for calculation of NFE earnings may be extended by the board of approval (BOA) for a period of up to one year.

Monitoring of NFE:

Performace of EOU / EHTP / STP / BTP units shall be monitored by Unit Approval Committee as per guideline in HBP (Hand Book Procedure)

Letter of Permission / Letter of Intent & Legal Undertaking:

  • It is issued by DC (Development Commissioner) / (Designated Officer) to EOU / EHTP / STP / BTP units.
  • LOP / LOI have an initial validity of 2 years to enable the unit to construct the plant & install the machinery & by this time unit should have commenced production.
  • In case the unit is not able to commence production in an initial validity of 2 years, an extension of 1 year may be given by the DC for valid reasons to be recorded in writing.

Sample for Letter of permission

Investment Criteria:

  • The only project having a minimum investment of 1 crore in plant & machinery shall be considered for establishment as EOUs.
  • It is not applicable to existing units, units in EOU / EHTP / STP / BTP.
  • EOU may allow an establishment of EOUs with lower investment criteria.

Applications & Approvals:

  • Application for setting up of units under EOU scheme shall be approved or rejected by the Unit Approval Committee within 15 days.
  • In other cases, approval may be granted by Board of Approval set up for this purpose as indicated in HBP (Handbook Procedure).

 

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