export Oriented Unit

1. EOU export Oriented Unit Presented by : Indrajeet Kumar 00216603912

2. The purpose of this scheme was basically to boost exports by creating additional production capacity with certain minimum value addition. This scheme was introduced by Ministry of commerce in 1980. It was introduced as a complementary scheme to the FTZ/EPZ introduced in the sixties, which had not attracted many units due to location restrictions. Export Oriented Unit 31 st December 1980 Introduction

3. Objectives of the EOU scheme Domestic Labour law is applicable Free to select the location of a project To generate additional employment To increase exports Stimulate direct foreign investment Transfer of latest technologies Earn foreign exchange to the country

4. Obligation of EOU The EOUs are required to achieve Positive Net Foreign Exchange Earning (NFE). NFE shall be calculated cumulatively for a period of Five years from the date of commencement of production. Input / output norms to be maintained as per FTP on the resultant product. Unutilized material can be disposed on payment of applicable duties.

5. Benefits of EOU  All the imports to units are customs duty free. Exemption from Central Excise Duty for the procurement of Capital Goods and Raw Materials from domestic market. Units are entitled to sell the product in local market upto 50% of the products exported in value terms. 100% of foreign equity is permissible. Reimbursement of Central Sales Tax (CST) paid on domestic purchases. No restrictions on External Commercial Borrowings. Full freedom for sub-contracting. EOUs are free to select the location of a project. Exemption from paying electricity duty.

6. Benefits cont…. Fast Track Clearance Scheme (FTCS) for clearances of imported consignments for EOU. Sub-contracting to DTA units permissible after obtaining permission on annual basis. Unutilized raw material can be disposed of on payment of applicable duties. The unit can exit with permission of Development Commissioner, on payment of applicable duties. Prescribed percentage of foreign exchange earnings can be retained in EEFC account in foreign exchange. EOUs can export through an export house/trading house/star trading house or other EOUs.

7. Major Sector in EOU PHARMACEUTICALS ENGINEERING GOODS CHEMICALS COMPUTER SOFTWARE GEM & JEWELLERY GRANITE COFFEEE FOOD PROCESSING TAXTILES / GARMENTS

8. Eligibility criteria An EOU can be set up by any entrepreneur for manufacturing of goods and also for rendering services. An EOU can be set up for repair, reconditioning, re-making and re-engineering also. An EOU unit is required to achieve only positive Net Foreign Exchange Earning (NFE) over a period of 5 years. Trading activity is not allowed in the EOU Scheme. EOU can also be set up in the sectors like agriculture , animal husbandry, aquaculture, floriculture, horticulture, viticulture, etc.

9. Basic Requirements for setting up an EOU Planning your venture Is it on your own With foreign participation and nature of participation (foreign investment allowed 100%) What product do you intend to manufacture Product/By-product Does it requires clearance from Central/State Government authorities Is it an SSI Unit. If so, registration is required as an SSI. Technology to be used Indigenous / foreign . Related costs and conditions. Feasibility report On your own or with help of consultant. The finances involved Land, structure, buildings etc (Please note, building construction material is not exempted from duty) .

10. Salient Features No licence required for import ( except restricted items) Exemption from Central Excise Duty in procurement of capital goods, raw materials, consumables, spares, packing material etc from the domestic market. Exemption from Customs duty on import of capital goods, raw-materials, consumables, spares, packing material etc. Reimbursement of Central Sales Tax (CST) paid on domestic purchases (but no local tax). Supplies from Domestic Tariff Area (DTA) to EOU treated as deemed exports. 100% Foreign direct investment permissible. Exchange earners foreign currency (EEFC) Account. Facility to retain 100% foreign exchange proceeds in EEFC account. Facility to realize & repatriate export proceeds within 12 months.

11. Cont…. Re-export of imported goods found defective for repair/replacement, testing/ calibration and return. Access to domestic market upto 50% FOB value of export on payment of concessional rate of duty. Job work on behalf of domestic exporters for direct export allowed. Conversion of existing Domestic Tariff Area (DTA) unit into an EOU permitted. New EOUs get Corporate Income Tax concessions till 2009 . Even second hand plant & machinery can be imported. Can Procure duty-free inputs for supply of manufactured goods to advance licence holders.  EOUs get upto 5 years for utilization of imported capital goods, and upto 3 years for other items.

12. THANK YOU