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By:Ashfaque Husian Nagpurwala 075Tapas Kolte 149Vikas ShahPayal Choudhary 130Harshita Goel

EOU/EHTP/STP/Biotech Parks

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Export Oriented Units

(EOU's)

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INTRODUCTION ON EOU

Introduced -31stDecember 1980

-by Ministry of Commerce and industry,

Govt. of India

Why?? -To boost exports by creating additional

production capacity

Deciding authority: BoA

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Eligibility

Units undertaking to export their entireproduction of goods and services.

(manufacture, repair, re-make, re-condition, re-engineer, render services.)

+ve Net Foreign Exchange- NFE for 5

years

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Key Points

EOUs can get a location of theirchoice Customs-bondedanywhere in India.

EOUs can import without duties,all capital goods and raw materialsfor running the unit

EOUs can sell up to 50% of FOBvalue of exports in the Indianmarket at concessional duties

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Approvals for EOUs

Trading not permitted.

Minimum Investment for approvalas an EOU should be Rs.10million in plant &machinery

Licenses are required

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Preparation for Registration

Decision on various fronts like type, location etc.

Obtaining environmental clearence

Obtaining bank acc. For foreign exchange

Obtaining sales tax registration Obtaining govt. clearences

Getting PAN number

Getting IE Code

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Procedure Of Registration

1 Documents along with the

application

2 Grant of registration to EOUs

(5 Days)

3 Issue Of Certificate

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1. Documents

Total 6 Documents Required copy of LOP (letter of Permission)

Copy of Private Bonded Warehousing License

issued under section 58 of the Customs Act,

Bank attested signatures of authorized signatoriesof the EOU/EHTP/STP unit.

Passport size photograph of

Director/Proprietor/signatories

Copy of IEC No

Copy of green card

Copy of Legal Agreement For 100%EOU

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Letter of Permission

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Private Bonded Warehousing

License

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Green Card

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Transfer of Goods

Transfer of manufactured goods from one EOU to another isallowed with prior intimation to concerned DC and Customsauthorities

(A)

Capital goods may be transferred or given on loan with priorintimation to concerned Development Commissioner and Customsauthorities.

(B)

Goods supplied by one unit to another shall be treated as importedgoods for second unit for payment of duty, on DTA sale by secondunit.

(C)

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Major Sectors of EOU GRANITE TEXTILES / GARMENTS

FOOD PROCESSING

CHEMICALS

COMPUTER SOFTWARE COFFEE

PHARMACEUTICALS

GEM & JEWELLERY

ENGINEERING GOODS ELECTRICAL & ELECTRONICS

AQUA & PEARL CULTURE

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Inter unit Transfer

Transfer of manufactured goods from one EOU to another isallowed with prior intimation to concerned DC and Customsauthorities.

(A)

Capital goods may be transferred or given on loan to otherEOU with prior intimation to concerned DC & Customsauthorities.

(B)

Goods supplied by one unit of EOU to another unit shall betreated as imported goods.

(C)

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EOUs and Foreign Exchange

EOUs may freely repatriate investment & returns abroad

(A)

EOUs may invoice sales to other EOUs etc in foreignexchange

(B)

EOUs need to bring export proceeds to India only within360 days of export .

(C)

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Exit from EOU

An EOU / EHTP / STP / BTP Unit may also be permitted by DevelopmentCommissioner to exit under Advance Authorization as a one time option.

Unit proposing to exit out of EOU scheme shall intimate DC and Customs and

Central Excise authorities in writing.

An EOU/EHTP/STP/BTP unit may also be permitted by DevelopmentCommissioner, to exit from the scheme at any time on payment of duty on capital

goods under the prevailing EPCG Scheme for DTA Units.

If unit has not achieved obligations, it shall also be liable to penalty at thetime of exit.

With approval of DC, an EOU may opt out of scheme.

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Who can Operate

To run manufacturing activitiesforeign companies need to set up anIndian Company

A Company registered in India can

start an EOU unit without starting anew legal entity: separate accountssuffice.

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Benefits of EOU

No payment of Income Tax

Imports => customs duty free.

No Central Excise on Capital Goods and Raw

Materials from domestic market.

100% of foreign equity is permissible.

Reimbursement of Central Sales Tax

Exemption up to 90% from Income-tax

Full Freedom for sub-contracting.

Exemption from the payment of Electricuty duty.

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Benefits of EOU

Fast Track Clearance Scheme (FTCS) forclearances of imported consignments for EOU.

In certain cases, excise duty payable will be only

50%/30% of normal

100% exemption on sales tax

Job work for exports is permitted

Supplies made to EOU by Indian supplier are

deemed exports No restrictions on managerial remuneration

No restrictions on External Commercial

Borrowings

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EOU 04 V/S 09

Procurement and supply of export promotionmaterial of 1 .5% of FOB value of previous years

exports is allowed.

Goods imported shall be used only for export

production

Time limit for export of Gold/silver/ platinum

jewelry increased from 60 days to 90 days

Procurement and export of spares/components,increased from 1.5% to 5 %

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EOU 04 V/S 09

Sectors other than Gems & Jewellery mayimport/procure 5% FOB(PFY) value without

payment of duty.

units which are manufacturing and exporting

more than one product can sell 90% of FOB ofany of these products into DTA.

Unit will not be required to furnish bank guarantee

at the time of import, where unit has

(i) a turnover of Rs. 5 crores or above

(ii) unit is in existence for at least three years

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Electronic Hardware Technology

Park (EHTPs)

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ABOUT EHTPs

The EHTP Scheme is a 100% Export OrientedScheme for undertaking manufacturing of

electronic hardware equipment/components in

India.

An Electronic Hardware Technology Park (EHTP)may be an individual unit by itself or a unit located

in an area designated as EHTP Complex.

The EHTP Scheme is also administered by the

Ministry of Communications & Information

Technology.

I t b fit

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BENEFITS

GRANTE

DTO

EHTPs.

Import benefits.

Duty free and bonded areas.

Exemption from payment of corporate income tax andalso sales tax reimbursement.

100% foreign equity allowed.

Supplies made by DTAs to EHTPs to be treated asdeemed exports.

EHTP unit maybe setup for both hardware and

software in an integrated manner.

No excise duty levied on purchase of indigenousgoods.

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Minimum Export Obligation

As per the EXIM policy, 2002-07, an EHTP shallbe a net foreign exchange earner.

It is calculated cumulatively for a period of 5

years.

Positive NFE = FOB value of exports-(sum total of

CG imported + value of payments made in foreign

exchange)

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Criteria for automatic approval

The unit shall meet the requirements of thecustom authorities.

It is amenable to bonding by the customs.

All the manufacturing operations are carried out

in the same premises.

However, the unit may be permitted to sub-contract

part of their production process.

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REGISTRATION PROCEDURE

The application for setting up a unit must be dulyfilled with signatures and rubber stamp on each

page of the application.

An application fee of 2500 is to be paid.

The project report must contain details about:

Company profile, promoters background, services

offered, marketing strategy, manpower plan, future

plans, financial statements, finance details,

projected financial statements, export workings.

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REGISTRATION PROCEDURE

The MOA and AOA of the company is to besubmitted.

Once the director acknowledges the receipt of the

application, a reference no is given to each

application.

The applicant is the required to give a

presentation on his B plan in the EHTPI office.

On approval, letter of permission is issued to theunits.

Now, the unit needs to undertake the following:

Execution of legal agreement.

Custom bonding.

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Software Technology Parks

(STPs)

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Bio - Technology Parks

(BTPs)

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