EOU Scheme Slideshow

7292019 EOU Scheme Slideshow

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1

EOU Scheme-Overview

bull Units undertaking to export their entire production of goodsand services may be set up under the Export Oriented Unit(EOU) Scheme

bull EOUs can get a location of their choice Customs-bondedanywhere in India

ndash For setting up an EOU in Karnataka Kerala Lakshadweep or Maheapply to Development Commissioner Cochin SEZ

bull EOUs can import without duties all capital goods and rawmaterials for running the unit

ndash EOUs can procure these items from Indian sources also without exciseduties and sales taxes

bull EOUs can sell upto 50 of FOB value of exports in theIndian market at concessional duties

bull New EOUs get Corporate Income Tax concessions till 2009



2

Approvals for EOUs

bull EOUs are given approval for manufacture of goods

including re-furbishing as well as for rendering of services including bio-technology BPO CallCentres IT enabled Services An EOU may alsoengage in mining agriculture aquaculture

floriculture or horticulturebull Trading by EOUs is not permitted

ndash Minimum Investment for approval as an EOUshould be Rs10 million in plant ampmachinery

bull Software services handicrafts agriculture floriculture aqua-culture animal husbandry information technology are exempted from this sizerestriction



3

Approvals for EOUs Licences are required for

Manufacturing arms and ammunition atomic substancesnarcoticspsychotropic substances and tobacco products

Establishing EOUs in Bangalore and Cochin city limits (unless it is a non-polluting sector EOU or is located in an industrialestate within the city)

Approvals for licensable activity and services aregiven by the Board of Approvals in the CommerceMinistry Applications are to be routed through the Development

Commissioner

Approval (called Letter of Permission (LOP)) for non-licensable manufacturing activity is given locally bythe Development Commissioner

Relevant forms are available at

httpwwwcepzcomeouforms



4

EOU Scheme Features

bull EOUs may export all products except prohibited items of exports

bull EOUs may import without duty all types of goods includingcapital goods required for its activities unless they areprohibited for import

Even second hand plant amp machinery can be imported

Capital Goods can be purchased loaned sourced fromforeigndomestic leasing companies or brought free of cost

EOUs get upto 5 years for utilization of imported capital

goods and upto 3 years for other items



5

EOUs amp FDI

100 FDI in manufacturing EOUs is permitted under the

automatic route of the Reserve Bank of India

ie first bring in the money and then inform Reserve Bank of

Indiarsquos local office in Form FC(RBI) within 30 days of receipt

Also under the automatic route for EOUs are

External Commercial Borrowing upto USD 50 million with

maturities of 3 years or more for funding and running the unit

Use of brand namestrademarks if royalty is upto 2 on exports and

1 on domestic sales without technology transfer

Foreign technology tie-ups if lump sum payment does not exceedUSD 2 million and if royalty is upto 5 on domestic sales and 8 on

exports even for wholly owned subsidiaries



6

EOUs and Foreign Exchange

EOUs may freely repatriate investment amp returns

abroad

EOUs need to bring export proceeds to India only

within 360 days of export

And even then upto 100 may be retained in foreign

currency in the unitrsquos EEFC Account

EOUs may invoice sales to other EOUs etc in foreign

exchange

EOUs may invoice sales to Indian entities other than

EOUs also in foreign exchange sourced from from theirEEFC account or abroad



7

Tax Concessions for EOUs

New EOUs are entitled under to Corporate Income Taxexemption on physical exports out of India till 2009

Central Sales Tax is reimbursed on purchases from

local manufacturers

Supplies from local manufacturers are free of Central

Excise Duty

In case duties are paid Terminal Excise Duty is

reimbursedEOUs in manufacturing sector get exemption from

State Sales Tax on inputs (excepting fuel)



8

EOU Scheme amp DTA entities

bull Existing Indian entities can open a new EOU under

the same legal entity ndash But the EOU division must maintain separate accounts

including separate Bank accounts

bull DTA units can also convert to EOU scheme ndash

Units working with EPCG Advance Licencing can alsoconvert to EOU scheme

ndash Their pending licence obligations will be subsumed intothe EOU scheme

ndash But to be eligible for Corporate Income Tax concessions

under section 10B it has to be ensured that old assets donot exceed 20 of total assets of the EOU



9

EOUs amp Customs Department

bull EOUs have to get their premises bonded by the local Customs

Central Excise Department and function under their supervisionbull They can get a location of their choice so bonded

ndash All duty-free items have to be brought here first

bull One single multi-purpose bond with the Customs Central Excise

Department called the B 17 Bond suffices for all operationsbull While there is no physical control there is record-based control

ndash EOU has to maintain proper account of the import consumption andutilisation of all importedlocally procured materials and exports made andsubmit them periodically to the Customs

bullDuty foregone under the EOU scheme with interest is recoverablein case of fraudulent activity (along with prosecution amp penalties)



10

Export Obligations of EOUs

EOUs have only to be foreign exchange positiveFE Inflowsgt FE Outflows

where

bull FE Inflows = Export earnings (Direct Exports+ Exports throughThird Parties + Inter-unit Sales + Exports to

EOUSEZSTPEHTPs)

bull FE Outflows = Foreign Exchange outgo on imports of Rawmaterialsconsumables + FE payments of commission royalty fees dividends interest on ECB + share of amortised value of

capital goods imported Imported capital goods are amortized over 10 years only amortized

amount is included in NFE calculation Values are included in the calculation even if the imports are not actually

paid for



11

EOU Scheme- Duty-free Supplies from Indian

Market

Supplies from Indian manufacturers to EOUs areclassified as deemed exports and the suppliers are

eligible for

Advance Licence for import of intermediate inputs

Deemed Export Duty Drawback

Discharge of export performance obligation on the supplier

EOUs may obtain on production of a suitable

disclaimer from the suppliers the duty drawback andrefund of Terminal Excise Duty



12

EOUsrsquo Access to Indian Market

Sales to the Indian Market

EOUs can sell duty-free to other EOU SEZ STP EHTPsetc

EOUs can sell on full duties in the DTA against foreigncurrency (from EEFC account or from abroad)

This also counts for NFE

Apart from the above

EOUs can sell upto 50 of FOB value of physical exportsto the DTA at concessional duties

EOUs can sell over and above that at full duties subject toNFE being positive



13

EOU Sales to other EOUs

EOUrsquos Sales are duty-free to Indian entities like SEZ EOU EPZ STP EHTP units

Advance Licence Holders

Bonded Warehouses amp

Educational institutions defence establishments otheragencies notified by Government of India as eligible forduty-free imports

These sales count for computation of NFE But they do not count as physical exports

They can be invoiced in foreign currency or inIndian currency



14

EOUs amp Subcontracting

EOUs can subcontract up to 50 of production or part

of production process to units in the EOU or Indian

manufacturers

EOUs may temporarily take to the job workerrsquos premises

jigs moulds tools fixtures tackles instruments hangerspatterns amp drawings for job work

EOUs can even subcontract to units abroad

EOUs can import raw materials amp components free of cost

for job-working and returnEOUs can undertake job-work for export on behalf of

local manufacturers



15

EOU Scheme Exit Policy

Units can de-bond without paying duties capital goods they

have used for 10 yearsSoftware units can de-bond on duty-free basis after 3 years

Units can wind up their operations on meeting their export

obligations by

Exporting back any imported capital goods and othermaterial or transferring them to another SEZEOU unit or

Destroying the items in Customs presence or

Donation on gratis basis to educational institutions or

De-bonding on payment of duty on capital goods under the

EPCG Scheme as a one time option or

De-bonding all duty-foregone items by paying duties at current

rates on unutilised raw materials (imported value) and on capital

goods (on depreciated value only) and selling them in the DTA



16


In case of failure to achieve positive NFEduty foregone under the EOU scheme withinterest is recoverable in proportion to the

shortfall in NFEIf the unit has not met positive NFE de-

bonding shall also be subject to payment of penalties under the Foreign Trade(Development amp Regulation) Act 1992 andunder the Customs Act 1960



17

EOU Scheme Who can operate

bull To run manufacturing activities foreign companies

need to set up an Indian Company ndash The Indian Company has to have independent legal status

distinct from the parent foreign company

ndash The Company may be a wholly-owned subsidiary or a

joint venture company in financial collaboration with anIndian company in India

bull A Company registered in India can start an EOU

unit without starting a new legal entity separate

accounts suffice








accounts suffice



18

How to Contact

bull For more details of Indian EOUs see website

httpeouindiacom bull For details of EOUs with the Development Commissioner

CSEZ see wwwcepzcomsezheouindexhtm ndash especially the ldquoHow To Applyrdquo section at

httpwwwcepzcomeouhowtoapply

bull Contact CSEZ officeat Cochin mailcsezcom

Phone in at ++91-484-2413222

at Bangalore adcblrcsezcom

Phone in at 080-25714874



2

Approvals for EOUs

bull EOUs are given approval for manufacture of goods

including re-furbishing as well as for rendering of services including bio-technology BPO CallCentres IT enabled Services An EOU may alsoengage in mining agriculture aquaculture

floriculture or horticulturebull Trading by EOUs is not permitted

ndash Minimum Investment for approval as an EOUshould be Rs10 million in plant ampmachinery

bull Software services handicrafts agriculture floriculture aqua-culture animal husbandry information technology are exempted from this sizerestriction



3





Commissioner






4

EOU Scheme Features









5

EOUs amp FDI














6



abroad






exchange





7




local manufacturers


Excise Duty






8












9











10



where


EOUSEZSTPEHTPs)




paid for



11


Market


eligible for








12











13










14




manufacturers






local manufacturers



15





obligations by











16







17









accounts suffice








accounts suffice



18

How to Contact






Phone in at ++91-484-2413222


Phone in at 080-25714874



3





Commissioner






4

EOU Scheme Features









5

EOUs amp FDI














6



abroad






exchange





7




local manufacturers


Excise Duty






8












9











10



where


EOUSEZSTPEHTPs)




paid for



11


Market


eligible for








12











13










14




manufacturers






local manufacturers



15





obligations by











16







17









accounts suffice








accounts suffice



18

How to Contact






Phone in at ++91-484-2413222


Phone in at 080-25714874



4

EOU Scheme Features









5

EOUs amp FDI














6



abroad






exchange





7




local manufacturers


Excise Duty






8












9











10



where


EOUSEZSTPEHTPs)




paid for



11


Market


eligible for








12











13










14




manufacturers






local manufacturers



15





obligations by











16







17









accounts suffice








accounts suffice



18

How to Contact






Phone in at ++91-484-2413222


Phone in at 080-25714874



5

EOUs amp FDI














6



abroad






exchange





7




local manufacturers


Excise Duty






8












9











10



where


EOUSEZSTPEHTPs)




paid for



11


Market


eligible for








12











13










14




manufacturers






local manufacturers



15





obligations by











16







17









accounts suffice








accounts suffice



18

How to Contact






Phone in at ++91-484-2413222


Phone in at 080-25714874



6



abroad






exchange





7




local manufacturers


Excise Duty






8












9











10



where


EOUSEZSTPEHTPs)




paid for



11


Market


eligible for








12











13










14




manufacturers






local manufacturers



15





obligations by











16







17









accounts suffice








accounts suffice



18

How to Contact






Phone in at ++91-484-2413222


Phone in at 080-25714874



7




local manufacturers


Excise Duty






8












9











10



where


EOUSEZSTPEHTPs)




paid for



11


Market


eligible for








12











13










14




manufacturers






local manufacturers



15





obligations by











16







17









accounts suffice








accounts suffice



18

How to Contact






Phone in at ++91-484-2413222


Phone in at 080-25714874



8












9











10



where


EOUSEZSTPEHTPs)




paid for



11


Market


eligible for








12











13










14




manufacturers






local manufacturers



15





obligations by











16







17









accounts suffice








accounts suffice



18

How to Contact






Phone in at ++91-484-2413222


Phone in at 080-25714874



9











10



where


EOUSEZSTPEHTPs)




paid for



11


Market


eligible for








12











13










14




manufacturers






local manufacturers



15





obligations by











16







17









accounts suffice








accounts suffice



18

How to Contact






Phone in at ++91-484-2413222


Phone in at 080-25714874



10



where


EOUSEZSTPEHTPs)




paid for



11


Market


eligible for








12











13










14




manufacturers






local manufacturers



15





obligations by











16







17









accounts suffice








accounts suffice



18

How to Contact






Phone in at ++91-484-2413222


Phone in at 080-25714874



11


Market


eligible for








12











13










14




manufacturers






local manufacturers



15





obligations by











16







17









accounts suffice








accounts suffice



18

How to Contact






Phone in at ++91-484-2413222


Phone in at 080-25714874



12











13










14




manufacturers






local manufacturers



15





obligations by











16







17









accounts suffice








accounts suffice



18

How to Contact






Phone in at ++91-484-2413222


Phone in at 080-25714874



13










14




manufacturers






local manufacturers



15





obligations by











16







17









accounts suffice








accounts suffice



18

How to Contact






Phone in at ++91-484-2413222


Phone in at 080-25714874



14




manufacturers






local manufacturers



15





obligations by











16







17









accounts suffice








accounts suffice



18

How to Contact






Phone in at ++91-484-2413222


Phone in at 080-25714874



15





obligations by











16







17









accounts suffice








accounts suffice



18

How to Contact






Phone in at ++91-484-2413222


Phone in at 080-25714874



16







17









accounts suffice








accounts suffice



18

How to Contact






Phone in at ++91-484-2413222


Phone in at 080-25714874



17









accounts suffice








accounts suffice



18

How to Contact






Phone in at ++91-484-2413222


Phone in at 080-25714874



18

How to Contact






Phone in at ++91-484-2413222


Phone in at 080-25714874

EOU Scheme Slideshow

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Transcript of EOU Scheme Slideshow