Session 1 foreign trade policy

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  • SEZ = Special economic zone, EOU = Export Oriented Unit, STP = Software Technology Park, EHTP = Electronic Hardware Technology Park
  • Currently there are 114 SEZs (as of October 2010) operating throughout India in the following states[8]: Karnataka - 18; Kerala - 6; Chandigarh - 1; Gujarat - 8; Haryana - 3; Maharashtra - 14; Rajasthan - 1; Tamil Nadu - 16; Uttar Pradesh - 4; West Bengal - 2: Orissa - 1.Additionally, more than 500 SEZs are formally approved (as on October 2010) by the Government of India in the following states[9]: Andhra Pradesh - 109; Chandigarh - 2; Chattisgarh - 2; Dadra and Nagar Haveli - 4; Delhi - 3; Goa - 7; Gujarat - 45; Haryana - 45; Jharkhand - 1; Karnataka - 56; Kerala - 28; Madhya Pradesh - 14; Maharashtra - 105; Nagaland - 1; Orissa - 11; Pondicherry - 1; Punjab - 8; Rajasthan - 8; Tamil Nadu - 70; Uttarkhand - 3; Uttar Pradesh - 33; West Bengal - 22.
  • Session 1 foreign trade policy

    1. 1. Introduction to Foreign Trade Policy SESSION 1 LEGAL ENVIRONMENT OF BUSINESS 1
    2. 2. Background Waves of change:  Condition before 90s  New world economic order  Globalisation, Liberalisation of trade and investment  Development of IT & communication  Rule based multilateral trading systems – Uruguay round  Reduction in M tariffs & removal of non-tariff barriers
    3. 3. WHY EXPORTS? Foreign exchange requirement Rapid economic development - High growth rates have been achieved by many Asian countries India – since July 1991 – liberalisation, globalisation, privatisation Promotion of exports treated as a national priority Trade policy integrated with overall strategy of economic development Paradigm shift from import substitution –led growth to export led-growth
    4. 4. How is it different ? International trading environment (trade agreements, policies) Consumer preferences in different markets Terms & conditions of biz Communication and negotiations hold the key Logistics plays important role Realising payment against the shipment Claiming incentives/facilities
    5. 5. Foreign Trade Policy 27 August 2009 - 31 March 2014 th st Government of IndiaMinistry of Commerce and Industry Department of Commerce Website: http://dgft.gov.in FOREIGN TRADE POLICY 2009-14 5
    6. 6. In India,the legal framework for regulation of internationaltrade is mainly provided by the Foreign Trade(Development And Regulation) Act, 1992  whichreplaced the earlier law namely, the Imports &Exports (Control) Act 1947  6
    7. 7. The Ministry of Commerce, Government of India,formulates the Foreign Trade Policy (Export –Import policy), in terms of section 5 of theForeign Trade (Development And Regulation)Act, 1992 7
    8. 8. In India, Legal Framework for foreign trade isprovided by:Foreign Trade (Development And Regulation)Act, 1992Export (Quality Control and Inspection) Act, 1963Customs & Central Excise Duties Drawback Rules,1995Foreign Exchange Management Act, 1999Customs and Central Excise Regulations 8
    9. 9. Foreign Trade Policy : 2009-14Main policy provisions are given in ForeignTrade Policy : 2009-2014Covers procedures, agencies & docs required totake advantage of certain provisions of policy 9
    10. 10. Foreign Trade Policy : 2009-14 Deals with EXIM of merchandise and services Policy has been described in the following:  Foreign Trade Policy : 2009-14  Handbook of Procedures - Volume I  Handbook of Procedures - Volume II  ITC (HS) Classification of Import-Export Items 10
    11. 11. Achievements of FTP 2003-2008 2003-04 2008EXPORTS USD 63 bn USD 168 bnShare of global 0.83% 1.45%merchandise tradeshare of global 1.4% 2.8%commercial servicesexportshare in goods and 0.92% 1.64%services trade14 million jobs were created due to increased exports inthe last 5 years 11 *WTO estimates
    12. 12. Objectives of FTP 2009-2014Short termto arrest and reverse the declining trend ofexportsto provide additional support to those sectorswhich have been hit badly by recession in thedeveloped worldto achieve 15% annual export growth (US$ 200bn March 2011) 12
    13. 13. Objectives of FTP 2009-2014Short termto achieve an annual growth of 25% upto 2014to double India’s exports of goods and servicesby 2014long termto double India’s share in global trade by 2020 13
    14. 14. Strategy for implementation of FTP fiscal incentives institutional changes procedural rationalization enhanced market access across the world diversification of export markets 14
    15. 15. Strategy for implementation of FTPNeutralising the incidences of all levies, dutieson inputs used in exportsDuties/levies should not be exportedAvoiding skewed duty structure and ensuringthat Indias domestic sectors are notdisadvantaged in FTA/RTA/PTA that India entersinto 15
    16. 16. Strategy for implementation of FTPIdentifying and nurturing special focus area forgenerating employment in semi-urban and ruralareasFacilitating technological and infrastructuralupgradation of all sectors of Indian Economy,especially through import of capital goods & equipment 16
    17. 17. Strategy for implementation of FTPRevitalising Board of Trade by redefining its role,giving it due recognition & inducting experts onFTPActivating Indias embassies as key players fortrade intelligence and enquiry dissemination bylinking commercial wings of the embassies throughan electronic platform 17
    18. 18. Strategy for implementation of FTPunder advance authorization scheme, aminimum of 15% value addition on importedinputs has been stipulateddiversification of products and markets throughenhancement of incentive rates in particularproduct group and marketAdditional resources have been made availableunder the Market Development AssistanceScheme and Market Access Initiative Scheme. 18
    19. 19. Strategy for implementation of FTPfor market expansionComprehensive Economic Partnership Agreementwith South KoreaTrade in Goods Agreement with ASEAN w.e.f. 1.1.10Mercosur Preferential Trade AgreementPromotion of Brand India through more than six‘Made in India’ shows across the worldTechnological upgradation : promoting imports ofcapital goods under EPCG at 0% duty 19
    20. 20. Strategy for implementation of FTP  ‘Towns of Export Excellence’ and units located therein have been granted additional focused support and incentives.  high level coordination committee in the Department of *Commerce facilitates X’s by creating synergies in the line of credit extended through EXIM Bank for new & emerging markets 20*committee = Ministry of External Affairs + Department of Economic Affairs + EXIM Bank + R.B.I.
    21. 21. Strategy for implementation of FTP zero duty EPCG scheme and incentives for production and export of ‘green products’ e-trade project : to reduce transaction cost and institutional bottlenecks Additional ports/locations are being EDI (Electronic Date Interchange) enabled 21
    22. 22. Strategy for implementation of FTP single window mechanism : Inter-Ministerial Committee has been estd. to resolve trade related grievances 22
    23. 23. Schemes to Encourage X SERVED FROM INDIA SCHEME (SFIS) FOCUS MARKET SCHEME (FMS) VISHESH KRISHI AND GRAM UDYOG YOJANA (VKGUY) FOCUS PRODUCT SCHEME (FPS) Scheme for Assistance to States for Developing Export Infrastructure and Allied Activities (ASIDE)
    24. 24. Policy initiative SPECIAL FOCUS INITIATIVES  Market Diversification  26 new countries have been included within the ambit of Focus Market Scheme.  The incentives provided under Focus Market Scheme have been increased from 2.5 % to 3 %.
    25. 25. Policy initiative Support to status holders  additional duty credit scrip @ 1 % of the FOB of past export shall be granted for specified product groups including leather, specific sub sectors in engineering, textiles, plastics, handicrafts and jute Handlooms  Duty free import entitlement of specified trimmings and embellishments is 5% of FOB value of exports during previous financial year  No custom duty on Machinery & equipment for ETP  Duty free import of old pieces of hand knotted carpets on consignment basis for re-export after repair is permitted
    26. 26. Policy initiative Handicrafts  Duty free import entitlement of tools, trimmings and embellishments is 5 %of FOB value of exports during previous financial year.  No custom duty on Machinery and equipment for ETP  All handicraft exports would be treated as special Focus products and entitled to higher incentives. Leather and Footwear  Duty free import entitlement of specified items is 3 % of FOB value of exports of leather garments during preceding financial year.  Re-export of unsuitable imported materials such as raw hides & skins and wet blue leathers is permitted.  Re-export of unsold hides, skins and semi finished leather shall be allowed from Public Bonded warehouse at 0% of the applicable export duty.
    27. 27. General Provisions Regarding EXIM Free EXIM unless regulated Can X gifts of value < Rs. 5L in a licensing year All X contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but X proceeds shall be realised in freely convertible currency Units in SEZ shall be exempted from service tax
    28. 28. General Provisions Regarding EXIM For all goods and services exported from India, services received / rendered abroad, where ever possible, shall be exempted from service tax new grievance redressal mechanism has been put in place to facilitate speedy redressal of grievances of trade and industry
    29. 29. Main Provisions : FTP 2004-091. *Stability of Policy2. Liberalised Exports & Imports3. Imports of capital goods4. Export Promotion Capital Goods scheme5. Duty Exemption/Remission Scheme6. *Import of Replacement of Goods7. *Export and Import of Free Trade Samples8. *Replacement of Defective Goods9. *Export of Goods after Repairs10. *Export of Imported Goods 29
    30. 30. Main provisions : FTP 2004-092. Liberalised Exports & Imports  Provides for liberalised EXIM  Also provides for Restrictions based on protection of a. Public morals b. Human, Animal or Plant life or health c. Patents, Trademarks, Copyrights d. National Treasures (art, history, etc.) e. Prevention of use of prison labour f. Conservation of exhaustible natural resources 30
    31. 31. Main provisions : FTP 2004-092. Liberalised Exports & Imports EXPORT of various items can be classified into four categories A. Prohibited B. Restricted C. State Trading Enterprise D. Free with terms and conditions 31
    32. 32. Prohibited Can’t be exported!!! 32
    33. 33. Restricted  Can be exported only against a valid export licence or subject to such conditions as may be specified for a particular item in *ITC(HS) Classification  Export Licence is granted against confirmed export order only 33*Indian Trade Clarification based on Harmonized System of Coding
    34. 34. State Trading Enterprise Items can be exported by designated agencies of Central/State govt. E.g. STC (State Trading Corporation), IOC, MMTC (Metals and Minerals Trading Corporation of India), etc. 34
    35. 35. Free with terms & conditions Certain items are free to export No licence is required.**Subject to conditions likea) Minimum export priceb) Registration with export promotion councilc) Registration of export contracts, etc. 35
    36. 36.  Items which don’t fall in any category can be exported without any restriction!!! 36
    37. 37. Import policy has also divided the variousitems of IMPORT into 4 categories a. Prohibited b. Restricted c. Canalised d. STE 37
    38. 38. Prohibited Can’t be imported BEEF, IVORY, etc. 38
    39. 39. Prohibited items• All forms of wild life including their parts and products except Peacock Tail Feathers, including handicrafts made thereof and manufactured articles, and shavings of Shed Antlers of Chital and Sambhar subject to conditions.• Exotic birds• wild orchids, as well as plants as specified• Beef• Human skeletons• Tallow, fat and/or oils of any animal origin excluding fish oil• Wood and wood products in the form of logs, timber, stumps, roots, barks, chips, powder, flakes, dust, pulp and charcoal except sawn timber made exclusively out of imported teak logs/timber subject to conditions• Chemicals included in Schedule 1 of the Chemicals Weapons Convention of the United Nations• Sandalwood in any form, but excluding fully finished handicrafts made out of sandalwood and machine finished sandalwood products• Red Sanders wood in any form, whether raw, processed or unprocessed as well as any product made thereof.
    40. 40. Restricted Can be imported only against a valid import licence 40
    41. 41. Restricted items• Cattle, Camel• Chemical fertilizers• Dress materials/readymade garments fabrics/textile items with imprints of excerpts or verses of the Holy Quran• Hides and skins• Viscose staple fibre (Regular), excluding high performance viscose staple fibre• Silk worms, silkworm seeds and silk worm cocoons• And the list goes on and on …
    42. 42. Canalised Items can be imported only through designated agencies of GOI 42
    43. 43. Canalised items Petroleum products Mica waste Mineral ores , concentrates and compounds Niger seeds Onions
    44. 44. State Trading Enterprise Import of items is permitted by STE Solely in accordance with commercial considerations including PRICE, QUALITY, AVAILABILITY, MARKETABILITY, TRANSPORTATION, ETC. Items – wheat, rice, urea, petrol, diesel, etc. 44
    45. 45.  Exporter is required to obtain export licence for each order in case of export of restricted item Exporter should take into account the impact on delivery schedule before agreeing on delivery dates. 45
    46. 46. Main provisions : FTP 2004-093. Imports of capital goods  Today, no licence required, just pay import duty  a firm can import second hand capital goods w/o any import licence, no age restriction  Minm value of 2nd hand plant & m/c = 25 cr. 46
    47. 47. Main provisions : FTP 2004-094. Export Promotion Capital Goods scheme  To enable cost competitiveness, GOI introduced EPCG scheme  Firms now pay only *5% custom duty  Capital goods includes : a) New as well as second hand capital goods b) Computer software systems c) Spares, jigs, dies, fixtures & moulds d) Components of capital goods e) Spares of existing plant & machinery 47 *subject to fulfillment of export obligation
    48. 48. Main features of EPCG scheme Eligibility of import Following firms can import at 5% duty  1 Manufacturer Exporters, 2 Merchant Exporters and 3 Service providers  Common service providers in towns of export excellence, e.g. Tirupur, Panipat, Ludhyana  Retailers having minimum area of 1000 sq.mt.  Project imports notified by the Central Board of Excise & Customs wherein basic customs duty on imports is 10% with a CVD of 16% 48
    49. 49. Main features of EPCG scheme Amount of Export Obligation  8 times the amount of duty saved on import of capital goods under this scheme  6 times the amount of duty saved in case of  SSI units provided the landed CIF value of capital goods < 25 lakhs and after inclusion of goods should be < SSI limit of investment (1Cr.) 49
    50. 50. Main features of EPCG scheme Period of Discharge of Export Obligation  Within 8 years from date of issuance of licence.  Up to 12 years in the following cases:  Amount of duty saved is > 100 crores  EPCG licence holder is a unit under the revival plan of BIFR (Banking for Industrial and Financial Restructuring)  Licence holder is in Agri-export zone 50
    51. 51. Main features of EPCG scheme Discharge of Export Obligation 1. Export obligation can be fulfilled by export of goods which can be manufactured by imported capital goods. 2. If the licence holder fulfills > 75% of export obligation (including avg. level of export) in half the period of export obligation, the remaining obligation is condoned and licence is redeemed 51
    52. 52. Main features of EPCG scheme Discharge of Export Obligation 3. Licence holder shall fulfill export obligation over the specified period in the following proportions Period of export obligation Minimum export obligation to (8 years) be fulfilled 1 to 6th year 50 % 7th and 8th year 50 % Period of export obligation (12 years) 1 to 10th year 50 % 11th and 12th year 50 % Export obligation of a particular block of years may be set off by the excess of 52 export made in the preceding block of year
    53. 53. Main features of EPCG scheme Leasing of Capital Goods  Licence holder may source new capital goods from domestic leasing company/domestic manufacturer.  No permission of licensing authority is required under leasing financial arrangement  Licence holder alone shall be responsible for fulfillment of export obligation 53
    54. 54. Main provisions : FTP 2004-095. Duty Exemption/Duty Remission Scheme  FTP provides for duty exemption/ remission scheme + EPCG scheme to augment Indian export  Exporters can import duty free inputs required for manufacture of products for export 54
    55. 55. Main features of EPCG scheme Period of Export Obligation  Should be fulfilled within 24 months from date of licence  Can be extended by 6 months to composition fee of 2% of duty saved on unutilised imported items  Can be extended further by 6 months : pay 5% 55
    56. 56. SEZ, EOU, STP & EHTP Schemes 56
    57. 57. Schemes For Encouraging ExportsAll nations encourage exports….. ….to counter adverse Balance of TradeVarious schemes to encourage exportsMainly supported and supervised byMinistry of CommerceEPC for various categories 57
    58. 58. Export Incentives for ManufacturerIndigenous inputs w/o payment of excise dutyNo excise charged on final productImported inputs w/o payment of customs dutyNo export duty on export of final productFast finance at concessional interest ratesExemption from income taxExemption from SALES TAX on final product(refund of CST paid on inputs in certain cases) 58
    59. 59. WTO STIPULATION‘No country can give export incentives’However….goods can be made tax free for exportpurposeAll export promotion schemes ensure that inputsas well as final products are made ‘TAX FREE’ 59
    60. 60. Input Duty Relief SchemeVarious schemes – to obtain duty free inputs ORget refund later1. Some schemes – unit has to be isolated from domestic production units E.g. EOU, STP, EHTP and SEZ 60
    61. 61. Input Duty Relief Scheme2. Other schemes –domestic producers are also entitled to get inputs/capital goods free of taxesE.g. a) Advance Licence scheme b) Duty Entitlement Pass Book scheme (DEPB) c) Duty Free Replenishment Certificate scheme (DFRC) d) EPCG scheme (Export Promotion Capital Goods scheme) 61
    62. 62. Input Duty Relief Schemee. Rebate of duty on inputs if final product is exempt from dutyf. Under duty drawback scheme, excise duty paid on inputs is returned as rebate 62
    63. 63. Highlights of EOU/SEZ scheme SEZ unit has to be located within the specified zones developed, 114 operational, another 500 formally approved EOU unit can be set up at any of over 300 places all over IndiaCurrently there are 114 SEZs (as of October 2010) operating throughout India in the following states[8]: Karnataka - 18; Kerala - 6;Chandigarh - 1; Gujarat - 8; Haryana - 3; Maharashtra - 14; Rajasthan - 1; Tamil Nadu - 16; Uttar Pradesh - 4; West Bengal - 2: Orissa -1.Additionally, more than 500 SEZs are formally approved (as on October 2010) by the Government of India in the following states[9]:Andhra Pradesh - 109; Chandigarh - 2; Chattisgarh - 2; Dadra and Nagar Haveli - 4; Delhi - 3; Goa - 7; Gujarat - 45; Haryana - 45;Jharkhand - 1; Karnataka - 56; Kerala - 28; Madhya Pradesh - 14; Maharashtra - 105; Nagaland - 1; Orissa - 11; Pondicherry - 1;Punjab - 8; Rajasthan - 8; Tamil Nadu - 70; Uttarkhand - 3; Uttar Pradesh - 33; West Bengal - 22. 63
    64. 64. Highlights of EOU/SEZ schemeSimilarly, STP/EHTP unit can be situatedwithin SEZ or at any place where EOU canbe set up 64
    65. 65. Highlights of EOU/SEZ schemeNo custom duty on import of capitalgoods, raw materials, consumables,packing material, spares etc.No excise duty on indigenous inputs*Second hand capital goods can also be imported. 65
    66. 66. Highlights of EOU/SEZ schemeHave to achieve +ve NFE (Net ForeignExchange Earnings). NFE = A – BA= FOB value of exportsB = CIF Value of all imported inputs andcapital goods and all payments made inforeign exchange. 66
    67. 67. Requirements of +ve NFEcalculated cumulatively for 5 yrs fromcommencement of commercial productionAll foreign exchange outgo is included* 67
    68. 68. Foreign exchange outgo includes…Capital goodsRaw materialsConsumables and sparesDividend payable in foreign exchangeRoyalty to collaboratorsDesign and know-how fee 68
    69. 69. Foreign exchange outgo includes…Payment to foreign techniciansTraining to Indian technicians abroadForeign travelInterest paid on ECB / deferred payment creditAny other payment in foreign exchange. 69
    70. 70. If NFE is not achieved, duty andinterest in proportion to default willbe payable 70
    71. 71. Highlights of EOU/SEZ schemeEOU Minimum investment in plant andmachinery and building = Rs 1 crore. Thisshould be before commencement ofcommercial productionSEZ No such limit 71
    72. 72. Highlights of EOU/SEZ schemeA bond in prescribed form has to be executed.EOU B-17SEZ  Form prescribed in SEZ Rules, 2003*There is NO physical supervision of customs / exciseauthorities over production and clearances, BUTprescribed records are required to be maintained. 72
    73. 73. Highlights of EOU/SEZ schemeEOU Fast Track Clearance Scheme (FTCS) forclearances of imported consignmentsSEZ  customs clearance for export and import isobtained within the zone itself 73
    74. 74. Highlights of EOU/SEZ schemeGenerally, all final production should be exported,EXCEPT rejects up to prescribed limit. 74
    75. 75. Highlights of EOU/SEZ schemeSale within India should be on payment of exciseduty = normal customs duty (If imported)Exceptions In certain cases, excise duty payable= 50%/30% of normal customs duty applicable ifgoods are imported into India 75
    76. 76. Highlights of EOU/SEZ schemeSUB-CONTRACTING is allowed subject topermission on annual basisJOB WORK for exports is permittedSAMPLES can be sold / given free withinprescribed limitUNUTILISED RAW MATERIAL can be disposed ofon payment of applicable duties 76
    77. 77. Highlights of EOU/SEZ schemeThe unit can EXIT (DE-BOND) withpermission of Development Commissioner,on payment of applicable duties. 77
    78. 78. Highlights of EOU/SEZ schemeEOU Central Sales Tax (CST) paid onpurchases is refundable. Refund is obtainedfrom Development CommissionerSEZ  Supplier DOES NOT have to pay CST 78
    79. 79. Highlights of EOU/SEZ schemePrescribed %age of foreign exchangeearnings can be retained in *EEFC account inforeign exchange100% foreign equity is permissible, exceptin a few cases**EEFC A/C – Exchange Earners Foreign Currency Account 79
    80. 80. Highlights of EOU/SEZ schemeSupplies made to EOU by Indian supplier are‘deemed exports’ and supplier is entitled tobenefits of ‘deemed export’Supplies to SEZ are ‘exports’ and all exportbenefits are available 80
    81. 81. Highlights of EOU/SEZ schemeRestrictions under Companies Act on*managerial remuneration are notapplicableNo restrictions on External CommercialBorrowings*20 lakhs/month 81
    82. 82. STP / EHTP UNITConcept of STP/EHTP is similar to EOU/SEZ.Administered by Ministry of InformationTechnology.STP/EHTP unit can be set up as an EOU unitanywhere in India or as a SEZ unit at specifieddeveloped locations in India. 82
    83. 83. STP / EHTP UNITA software development firm qualifies asSTP/EHTP unit.Can import goods on loan from clients forspecific period.Can export software electronically or throughphysical transport. 83
    84. 84. STP / EHTP UNITActivities allowed…..exports of professional servicesdevelopment of computer softwaredata entry and conversiondata processing, analysis and controldata managementcall centre services. 84
    85. 85. Which Scheme to Choose?If your major production is towards sale in DTA(Domestic Tariff Area), schemes like DEPB* orDFRC* or Advance License are suitable.* Duty Entitlement Passbook scheme (DEPB)* Duty Free Replenishment Certificate scheme (DFRC) 85
    86. 86. Schemes like EOU/SEZ are suitablewhen the undertaking is predominantlyexport orientedRequirement of imported capital goodsand raw material is high 86
    87. 87. EOU vs. SEZ‘EOU is more flexible than SEZ’Wide choice of location (EOU unit can beset up at any place declared as ‘warehousingstation’ under Customs Act) [300 places]EOU can be set up even within a part ofthe factory, thus saving considerable costs.Even use of common utilities is possible. 87
    88. 88. EOU vs. SEZEOU is more flexible than SEZIf export orders dry up, conversion of EOUto DTA unit by exit (de-bonding) iscomparatively very easy.In case of SEZ, the unit has to be physicallymoved out of the zone after exit (de-bonding). 88
    89. 89. EOU vs. SEZOn the other handinfrastructure available at SEZ unit is muchbetter than EOU units.Customs clearance for exports is obtainedwithin the zone itself, which is convenient. 89
    90. 90. Overview of EOU/SEZ schemeEOU/SEZ schemes are under Ministry ofCommerceBasic Policy of EOU : Chapter 6 of Exportand Import Policy 2009-2014Procedural Aspects : Chapter 6 ofHandbook of Procedures Volume I 90
    91. 91. Overview of EOU/SEZ SchemePrescribed Forms : Appendices to theHandbook of ProceduresEOU units are closely connected withCustoms Law, Excise Law, Income Tax Act andForeign Exchange Management Act 91
    92. 92. PowerPower generation/distribution can be setup in EOU/STP unit.can supply surplus power to anotherEOU/STP/EHTP/SEZ unit.Can supply surplus power to DTA unit onpayment of duty on consumables and rawmaterials used for power generation 92
    93. 93. Service SectorDuty free imports will be permitted ONLYto units exporting services and NOT todomestic service providersFurther, NO trading units are permittedEach EOU must have its website and e-mailaddress. 93
    94. 94. EOU/SEZ/STP/EHTP unit can be set up with100% foreign investment, except few*restricted sectorsSEZ unit can manufacture articles reservedfor SSI even if foreign equity exceeds 24%No license is required 94
    95. 95. PERMISSIBLE CAPITAL GOODSmaterial handling equipments, captive powerplants, office equipment, tools, prototypes, ACsystem, computers, laptops can be brought ascapital goods IF these are essential inmanufacture of goodsshould be located in regd./administrativeoffice 95
    96. 96. ANTI-DUMPING DUTY or SAFEGUARD DUTYNot applicable for imports by EOU or SEZunits, UNLESS it is specifically madeapplicable 96
    97. 97. CT-3 CERTIFICATEThe EOU/EHTP/STP unit can procureindigenous material w/o payment of exciseduty. 97
    98. 98. EXPORT/IMPORT OF DEFECTIVE INPUTS/FINAL PRODUCTS 98
    99. 99. RETURN OF REJECTED GOODS TO INDIGENOUS SUPPLIER 99
    100. 100. INTER UNIT TRANSFERInter unit transfers of manufactured goodsand capital goods from one EOU/SEZ unitto another EOU/SEZ unit w/o payment ofduty is permitted. 100
    101. 101. EOU : Allowed ActivitiesBesides manufacturing,(a) Import of goods for service activities(b) Reconditioning, repairs of imported goods and return to foreign suppliers(c) Destruction of waste and rejects with permission of Asstt. Commissioner even outside the premises 101
    102. 102. EOU – Allowed ActivitiesSERVICE has also been included as exportproduct as per EXIM Policy. 102
    103. 103. Routine procedures by EOU unitQUARTERLY AND ANNUAL REPORTSubmit in prescribed form toDevelopment Commissioner. 103
    104. 104. Routine procedures by EOU unitMaintenance of Separate Accountsseparate accounts and balance sheet ofEOU and Domestic Unit is required to claimIncome tax benefits.XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxXXXXXXXXXXXXXXXXXXXXXxxxxxxXXXXXXXXXXXXXXXXX 104

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