1. ELECTRONIC HARDWARE
TECHNOLOGY PARK

2. INTRODUCTION
 The EHTP Scheme is a 100% Export
Oriented Scheme for undertaking
manufacturing of electronic hardware
equipment/components and other items. in
India. This scheme is unique in its nature as
it focuses on one product/sector, i.e.
Electronic Hardware.

3.  An EHTP unit is also allowed to
manufacture items other than those specified
in the approval letter, provided that such
other items fall in the category of Electronic
Hardware, the design and production
facilities are common and have similar
manufacturing process.

4. SCHEME BENEFITS &
HIGHLIGHTS
 The Central Government, State
Government, Public or Private sector
undertakings or any combination thereof
may set up the Electronic Hardware
Technology Park (EHTP).
 A company may set up STP unit anywhere
in India.
 Foreign equity permissible upto 100%.

5.  100% foreign equity investment in the companies
permissible under the 'Automatic Route' of RBI.
 Approvals are given under single window
clearance.
 Project costing less than Rs. 100 million
investment are cleared by local STPI Authorities.
 Income Tax holiday as per IT Act of Ministry of
Finance, Govt. of India applicable time-to-time.
EHTP units are exempted from payment
of corporate Income Tax.

6.  Capital invested by Foreign Entrepreneurs,
Know-How Fees, Royalty, Dividend etc., can
be freely repatriated after payment of Income
Taxes due on them, if any.
 EHTP unit is a duty free bonded area under
section 65 of the Customs Act, 1962.

7.  100% Customs Duty exemption on imports
of Capital Goods and inputs (Raw Materials,
Components, Consumables, Parts and
packing Materials)100% Excise Duty
exemption on indigenous items
procurement.
 Import of Capital Goods on outright
purchase, loan, free of cost and lease basis is
permitted.

8.  Import of second hand capital goods is
permitted. (except prohibited items).
 Re-Export of capital goods is permitted
 Central Sales Tax reimbursement on
indigenous items procurement.
 Green card enabling priority treatment for
government clearances / other services.

9.  Sales in the DTA (Domestic Tariff Area) up
to 50% of the foreign exchange earned by
the EHTP unit.
 Inter Unit Transfer between
EOU/STP/EHTP/EPZ is permitted.
 Sub-contracting between
EOU/STP/EHTP/EPZ is permitted.

10.  Simplified Net Foreign Exchange Earnings
(NFEP) & Export Performance (EP) norms,
as applicable at the time of signing EHTP
agreement.
 Simplified depreciation norms on Capital
Good.
 Single Window Clearance Services
 Registration under EHTP Scheme

11.  Approvals for duty free Imports including
Second Hand Capital Goods
 Approval for Excise Duty exemption for
procurement of Indigenous Capital Goods
 Green Card issuance
 Attestation of Software Export Declarations
 Re-export of Capital goods imported on loan
basis as well as Repair/Replacement

12.  Shift / Inter Unit Transfer of capital goods
 Permission for Capital Structure Refinement
and ProPermission for Change of Company
Name and Location.
 ject Expansion.

13.  Reimbursement of the CST paid on
Domestic Purchases
 Approval for Sub-contracting
 DTA sales permission
 De-bond of equipments
 Letter of Permission Renewal
 Exit from scheme as per policy provision.

14. BENEFITS UNDER EHTP
SCHEME
 An EHTP may import free of duty capital
goods, raw materials, components and other
related inputs. However these should not be on
the negative list of prohibited items in the
Foriegn Trade Policy. Second hand capital
goods may also be imported by EHTP units.
 An EHTP unit may bunch the products
manufactured by it for sale in the DTA with its
entitlement. EHTPs are duty free and bonded
areas and customs exemptions are extended
accordingly.

15.  An EHTP is exempted from the payment of
corporate income tax up to 2010 and also
central sales tax reimbursement..
 Supplies that are effected in DTAs under
global tender conditions and payment in
forex are also considered as part of
relinquishment of export obligation.

16.  Supplies made by DTAs to an EHTP unit will
be regarded as deemed exports and is entitled to
benefits under the Foriegn Trade Policy. To get
this benefit, goods have to be produced in the
country and the supplies have to be made
against a letter of authority issued by an officer
designated in this behalf of the STPI,
Government of India.
 An EHTP unit may be setup for both software
and hardware in an integrated manner

17.  EHTP unit may purchase indigenous goods
free of excise duty
 EHTP unit may sell Goods/Services in DTA
up to 50% of FOB value of exports, subject
to fulfillment of positive NFE as per the
policy & payment of applicable duties.

18.  Minimum Export Obligation As per the Import-
Export Policy, 2002-2007, EOU/EHTP/STP
Unit shall be a net foreign exchange earner. Net
Foreign Exchange (NFE) earning shall be
calculated cumulatively for a period of five
years from the commencement of production,
according to the formula as under:
Positive NFE= A-B >0
A: FOB value of exports
B: Sum total of Capital Goods imported + value
of payments made in foreign exchange.

19. CRITERIA FOR AUTOMATIC
APPROVAL
The following will be the criteria for securing
automatic approval from the Director, EHTPI
within whose jurisdiction the unit is proposed to be
set up.
 The Directors of EHTPI have been vested with
powers to approve projects irrespective of the value
of import of Capital Goods;
 The Units meets the requirements of the Customs
Authorities in so far as:
 It is amenable to bonding by the Customs;

20.  All the manufacturing operations are carried out in
the same premises and the proposal does not
envisage sending out of the bonded area any raw
material or intermediate products for any other
manufacturing or processing activity;
However, the unit may be permitted to sub-contract
part of their production process through job work
by units in Domestic Tariff Area of other EHTP
Units including subcontracting abroad on
fulfillment of prescribed conditions.

21. REGISTRATION PROCEDURE
 Applications for securing both types of
approvals is to be submitted to the Director,
EHTPI within whose jurisdiction the unit is
proposed to be situated (see page 11 of Form
15-F-01).
 An application for setting up a EHTP unit is
received in the prescribed format no. 15-F-
01 from the potential software exporter.

22.  Application should be duly filled in with
signatures and rubber stamp on the each
page of the application.
 A demand draft in favour of EHTPI within
whose jurisdiction the unit falls for
Rs.2,500/- on account of Application Fee.

23.  Project Report covering details containing the
following details should be filed with the
application in form 15-F-01.
Company profile
 Promoters background
 Units Area of Expertise / Services offered
 Marketing Strategy / Marketing Arrangements
 Manpower plan

24.  Future plans
 Financials statement like :
 Cost of project & Means of finance
 Projected P&L A/c.
 Projected Balance Sheet
 Projected Cash flow / fund flow statement
 Export workings - (As per Transfer pricing
guidelines where ever applicable)

25.  Memorandum & Articles of Association (in
case the applicant is a company) and check
whether the “Computer Software/IT enabled
services” is one of the objects in the Main
Object para of the Memorandum of
Association.
 Partnership Deed (in case of Partnership
Firm)

26.  The Director acknowledges the receipt of
the application and a reference number is
given to each application.
 The applicant is thereafter called to give a
presentation on the project that he proposes
to undertake with complete profile of the
promoters, field of software development,
marketing arrangement, business plan etc. in
the EHTPI office.

27.  On approval of the project by the Director,
letter of permission (in format No. 15-F-02) is
issued to the units. The unit is thereafter
considered registered under the EHTP Scheme.
 On issuance of letter of permission, the EHTP
unit have to undertake the following:
 Execution of legal agreement
 Custom bonding

28. EXECUTION OF LEGAL
AGREEMENT
 Letter of Permission (LOP) issued by the EHTPI would be
construed as a license for all purposes under the scheme
including procurement of raw materials and consumables.
The LOP shall specify the items of manufacture, limit of
imported capital goods, projected export turnover in 5
years, location of EHTP unit, validity period, Net Foreign
Exchange earnings as a percentage of exports (NFEP),
limitation regarding sale of finished goods and rejects in
the Domestic Tariff Area (DTA) and such other matters as
may be necessary and also impose such conditions as may
be required. The unit is required to send a letter to the
Director, EHTPI confirming the acceptance of the terms
and conditions as laid down in the LOP.

29.  Thereafter, the unit shall execute a Legal
Undertaking as per format in Appendix-IX,
with the Director, EHTPI concerned.

30. PROCEDURE
 The Legal Undertaking is to be executed on
a stamp paper of Rs.50/- procured from the
civil court under which the concerned
EHTPI centre falls.
 Each page of the Legal Undertaking is
required to be signed and stamped by a
person duly authorised in this behalf along
with the Common Seal of the Company.

31.  A copy of the Board resolution authorizing
the person to act as signatory on its behalf is
also required to be enclosed.
 The Legal Undertaking after acceptance is
signed by the authorised signatory of EHTPI
and the original is retained. A photocopy of
the same is returned to the unit for record
purposes.

32.  Copy of the Legal Undertaking is to be
given to the Customs by the unit at the time
of Customs Bonding of the premises.
 A unit is required to pay 3-year advance
service charges at the time of signing of the
legal agreement on the basis of the
projections made by it in the application,
subject to a minimum of Rs. 50,000/- as per
the following norms:

33. Export Projection Service Charges
Exports upto Rs. 50 lacs per annum Rs. 15,000 per annnum
Exports more than Rs. 50 lacs per
annum but upto Rs. 300 lacs
Rs. 50,000 per annnum
Exports above Rs. 300 lacs per
annum
Rs. 1,00,000 per annnum

34.  In case of failure to fulfill the obligation
stipulated in the Letter of Permission, the
SPT unit would be liable to penalty in terms
of the Legal Undertaking or any other law
for the time being in force. The unit will also
be liable for the following:
• payment of custom and excise duty on-
Plant, machinery, equipment, raw material,
components and consumables.

35.  Penalty under Foreign Trade (D&R) 1922 and
Rules made thereunder
 Permission under Foreign Trade (Development &
Regulation) Act, 1992, and the Exim Policy is
required to be taken by the unit before the
products developed for exports are disposed off
in the local market

36. CUSTOM BONDING
EHTP units are compulsorily required to
carry out their operations in a Custom
bonded area whether it avails the benefits of
Customs Duty/Excise Duty exemption or
not. Vide Notification No. 33/94-Cus.(NT)
dated 1.7.1994, the power to declare an area
as a Custom bonded area has been delegated
to the Commissioner of Customs within
their respective jurisdictions.

37. To get the premises Custom Bonded, the
units are required to complete the following
formalities:
 Private Bonded Warehouse License from the
Customs.
 Single all purpose bond (B-17).

38. A EHTP unit is required to submit the
following documents to get the premises
bonded:
 Three copies of Floor Plan.
 Three copies of tentative list of Capital
Goods (along with their value) proposed to
be imported and indigenous goods to be
procured for the project.

39.  The Director attests the floor plan and the list of
Capital Goods. Two copies of the floor plan and
one copy of tentative list of capital goods are
forwarded to the Jurisdictional Assistant
Collector of Customs in the prescribed form
and will issue a License called “Private Bonded
Warehouse License” indicating its period of
validity and CIF value of duty free equipment
which can be kept within the same. This custom
bonding is valid for 5 years.

40. The unit is required to submit the following
documents to the Customs authorities:
 Copy of letter of approval issued by the
Director, EHTPI.
 Memorandum and Articles of Association and
Certificate from the Registrar of Companies for
its incorporation or partnership deed
 Floor plan duly approved by EHTPI.
 Copy of Purchase/Lease deed of
building/premises.

41.  Copy of Legal Agreement executed with
EHTPI.
 List of goods proposed to be imported
attested by EHTPI.
 Copy of IEC code.
 Copy of Green card issued by EHTPI.
 List of Directors of the Company.
 B-17 Bond.

42. SINGLE ALL PURPOSE
BOND(B-17)
 The EHTP unit is required to execute a single bond
(B-17) as per format given in Appendix-II before
the Assistant Commissioner of Customs in whose
jurisdiction the unit is situated. The Bond amount
has to be equivalent to 25% of the duty leviable on
the sanctioned requirement of imported and
indigenous capital goods plus duty forgone on the
raw materials to be held in stock for 3 months. The
Assistant Commissioner of Customs before whom
the above bond is executed would issue a certificate
stating that the unit has executed the bond. On the
strength of this certificate the goods will be allowed
clearance under the exemption notification.