EXPORT ORIENTED UNIT
Presented by :
The purpose of this scheme was basically to boost exports by creating additional
production capacity with certain minimum value addition.
OBJECTIVES OF THE EOU SCHEME
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
Unutilized material can be disposed on payment of applicable
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.
Fast Track Clearance Scheme (FTCS) for clearances of imported
consignments for EOU.
Sub-contracting to DTA units permissible after obtaining permission on
Unutilized raw material can be disposed of on payment of applicable
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.
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 reengineering 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.
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
What product do you intend to manufacture
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.
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).
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
Exemption from Customs duty on import of capital goods, rawmaterials, 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
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.
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
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
EOUs get upto 5 years for utilization of imported capital goods, and upto 3
years for other items.