Export Oriented Units

Export Oriented Units :

100% Export Oriented Units and Units in EPZ / STP / EHTP

IOO% export oriented unit means an industrial unit offering for export its entire production excluding rejects and items otherwise specifically permitted to be supplied to the Domestic Tariff Area (DTA). Such units may be set up under the Export Oriented Unit (EOU) Scheme or Export Processing Zones (EPZ) Scheme. IOO% EO Units can be established any where in India subject to locational criteria. Units in the Export Processing Zones can be set up in specific areas separated from the Domestic Tariff Area by physical harriers. The Software Technology Park (STPs) Scheme is a 100% EOU Scheme for units undertaking the development or software for export usmg data cornrnurucauon link or in the form of physical exports including export of Professional Services. A STP may be an independent unit or may be one of such units located in an area designated as STP complex by the Ministry of Information Technology. The Electronic Hardware Technology Par (EHTP) Scheme designed on the lines of the EOU Scheme is primarily meant for manufacture and export or hardware.

But the manufacture and export of software in an integrated manner commonly known as systems software is also allowed. However, units engaged exclusively in the manufacture of software are not permuted under this scheme. It may be noted that the EHTP may be a single unit by itself or one of such units located in an area designated as an EHTP.

So far the following nine free trade and export processing zones have been established.

1. Cochin Export Processing Zone (CEPZ) – Cochin - Kerala

2. Falta Export Processing Zone (FEPZ) - West Bengal

3. Kandla Free Trade Zone (KAFTZ) - Gujarat

4. Madras Export Processing Zone (MEPZ) - Madras

5. Noida Export Processing Zone -(NEPZ) – District of Ghaziabad (U.P.)

6. SantacruzElectronics Export Proccsxing Zone (SEEP) - Mumbay

7. Vishakhapatnam Export Processing Zone - (VEP) - AP

R. Surat Export Processing Zone - Gujarat

9. Kay-foam Export Processing Zone - Kandivili - Mumbai

Facilities to 100% Export Oriented Units and Units in EPZ / STP / EHTP

Proposals fulfilling certain conditions are granted automatic approvals within 15 days through the concerned Development Commissioner. In other case approvals are granted by Board of Approvals within 45 days.

No Import licence is required for import or capital goods raw materials and consumables.

Such units may import free of duty all types or goods including capital goods as defined in the EXIM Policy required by it for the manufacture, services, trading or in connection therewith provided they are not prohibited items of import in the ITC (HS).

Exempted from payment of central excise duty on capital goods component of raw materials bought from the Domestic Tarilf Area

Reimbursement of Central Sale Tax when supplies are made from the DTA to EPZ / STP / EHTP

Foreign equity participation upto 100% is permissible in the case of EOU / EPZ / STP / EHTP units.

Procurement of raw materials and export of finished products shall be exempted from Central levies.

Exempted from restrictions, if any, under Export Control Order on product manufactured and exported from EPZ / EOUs

Working credit facility for a period of 180 days is provided without production of firm export orders or letter of credit.

Remittance of profit and dividends earned by foreign investors allowed freely after payment of tax

Telephone / telex connections released on priority basis.

Exports from EPZ / EOUs are exempt from the purview of Compulsory Export lnspection.

Units in EPZs are offered concessional lease rent on plots / sheds for a maximum of initial three years linked to commencement of production.

Import of second hand capital goods is permitted.

EPZ / EOU / EHTP / STP / SEZ are eligible for complete tax holiday subject to maximum of 10 consecutive assessment years.

Such units may import, without payment of duty, all types of goods for creating a Central facility for use by software development units in STP / EHTP / EPZ.

FOB value of export of an EPZ / EOU / EHTP / STP / SEZ units can be clubbed with the FOB value of exports of its parent company in the DTA for the purpose of according status of Export House and Trading House and Star Trading House or Super Star Trading House for the latter.

Software Units may also be permitted to use the Computer System for training purpose (including commercial training) provided no computer terminal is installed outside the bonded premises for the purpose.

The EOUs are eligible for the Marketing Development Assistance (MDA) from confederation of 100% EOU for their promotional activities.

EOU / EPZ units shall be issued automatically Green Card by the DC concerned after execution of legal undertaking. Green Card entitles the holders to avail following facilities.

(a) Automatic licensing

(b) Automatic Customs Clearance for exports

(c) Automatic Customs Clearance for imports related to exports.

(d) LUT facility for duty free imports and any such facility as may be specified from time to time

Such units may sell 50% of the FOB value of exports in the DTA subject to the payment of applicable duties and fulfilment of minimum Net Foreign Exchange Earnings as a percentage of exports (NFEP) by the unit.

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