EOU-Export Oriented Units

100 % EOU manufacture the goods purely for export purpose however they can sell upto 50 % of the production in local area. Objectives of the Export oriented unit: The main objectives of the EOU scheme is to increase exports, earn foreign exchange to the country, transfer of latest technologies stimulate direct foreign investment and to generate additional employment.

EOU-Export Oriented Units

M:ajor Sectors in EOUs: GRANITE TEXTILES / GARMENTS FOOD PROCESSING CHEMICALS COMPUTER SOFTWARE COFFEE PHARMACEUTICALS GEM & JEWELLERY ENGINEERING GOODS ELECTRICAL & ELECTRONICS AQUA & PEARL CULTURE

EOU Activities
Initially, EOUs were mainly concentrated in Textiles

and Yarn, Food Processing, Electronics, Chemicals, Plastics, Granites and Minerals/Ores. But now a day, EOU has extended it area of work which includes functions like manufacturing, servicing, development of software, trading, repair, remaking, reconditioning, re-engineering including making of gold/silver/platinum jewellery and articles thereof, agriculture including agroprocessing, aquaculture, animal husbandry, biotechnology, floriculture, horticulture, pisiculture, viticulture, poultry, sericulture and granites.

Need for Special License

To set up an EOU for the following sectors, an EOU owner needs a special license. Arms and ammunition, Explosives and allied items of defense equipment, Defense aircraft and warships, Atomic substances, Narcotics and psychotropic substances and hazardous chemicals, Distillation and brewing of alcoholic drinks, Cigarettes/cigars and manufactured tobacco substitutes.

In the above mention cases, EOU owner are required to submit the application form to the Development Commissioner who will then put them up to the Board of

CHOOSING LOCATION FOR EOU

EOUs can be set up anywhere in

the country and may be engaged in the manufacture and production of software, floriculture, horticulture, agriculture, aquaculture, animal husbandry, pisciculture, poultry and sericulture or other similar activities.

CHOOSING LOCATION FOR EOU

However, it should be noted that in case of

large cities where the population is more than one million, such as Bangalore and Cochin, the proposed location should be at least 25 km away from the Standard Urban Area limits of that city unless, it is to be located in an area designated as an "industrial area" before the 25th July, 1991. Non-polluting EOUs such as electronics, computer software and printing are exempt from such restriction while choosing the area.

Bonding Period of EOU

The EOUs are licensed to manufacture goods within the bonded time period for the purpose of export. As per the Exim Policy, the period of bonding is initially for five years, which is extendable to another five years by the Development Commissioner. However on a request of EOU Unit, time period can also be extended for another five year by the Commissioner / Chief Commissioner of Customs.

CHOOSING LOCATION FOR EOU

Apart from local zonal office and state

government, setting up of an EOU is also strictly guided by the environmental rules and regulations. Therefore, an even if the EOU unit has fulfilled all locational policy but not suitable from environmental point of view then the Ministry of Environment, Government of India has right to cancel the proposal. In such situation industrialist would be required to abide by that decision.

SEZ-SEPCIAL ECONOMIC ZONE

With a view to enable hassle free export activity SEZ are

being set up . The units in these zones shall not be subjected to any predetermined value addition , export obligation and inputs outputs wastage . Sale in domestic tariff area by the units in such zones will be permitted on payment of full customs duty . Such SEZ has been selected one each in Gujarat and Tamil Nadu The exisisting EPZs(export processing zones) are also being converted in SEZ,s.

A Special Economic Zone (SEZ) is a geographical

region that has economic and other laws that are more free-market-oriented than a country's typical or national laws. "Nationwide" laws may be suspended

SEZ-SEPCIAL ECONOMIC ZONE

ELIGIBILITY

SEZ is a specifically delineated duty free and shall be deemed to be a foreign territory for the purpose of trade operations and duties and tariffs. SEZ unit may be set up for the manufacturer of goods and rendering services ,production ,processing ,assembling, trading ,repair ,remaking ,reconditioning ,reengineering including making of gold / silver platinum jewellery and articles there of or in connection there with SEZ units are allowed to manufacture items reserved for SSI(small scale industries) Subcontracting of a part of production abroad is permitted

Features of SEZ
1 domestic sales/purchase 2 Export & Import of goods 3 Net foreign Exchange Earnings (NEF) 4DTA sales and supplies Domestic Tariff Area

(DTA) 5 Export through status holder 6 Inter limit transfer 7Administration and setting SEZ 8Export Proceeds

Advantages of SEZ
It offers entrepreneurs an attractive package of incentives

and concessions , gradually introduced over a period of time . All imports into the zone such as capital goods , raw material , packaging material, components , office equipments etc have been placed under OGL system and such imports are permitted duty free entry into the zone , subject to the terms of the project approval

(Open Government license)-You are encouraged to use and

re-use the Information that is available under this licence, the Open Government Licence, freely and flexibly, with only a few conditions. The Licensor grants you a worldwide, royalty-free, perpetual, non-exclusive licence to use the Information subject to the conditions below. This licence does not affect your freedom under fair dealing or fair use or any other copyright or database right exceptions and limitations.

Advantages of SEZ
Indigenous goods such as capital goods , rw

material , and other production requirement can be produced from domestic tariff area DTA into zones free of central excise duty There is a total wavier of the provisions of the export trade control order with regard to the products manufactured and exported from SZ Central excise is also exempted on the products manufactured with in the Zone for export purpose

Advantages of SEZ
A five year tax holiday is the most significant fiscal

(ref to finance )benefit to units . The import policy permits sales up to 25% of their annual production in the home market without the requirements of import licence subject to payment of customs duty For attracting foreign investors , equity participation even up to 100% is permitted in the industrial ventures promoted in SEZ For export promotion , units in SEZ are given a special facility of blanket permits Units in SEZ can give longer credit period of up to 360 days

Export and Trading Houses

Merchant and manufacturer exporters

including those with foreign equity may apply for classification as Export Houses and Trading Houses and avail of special associated benefits. There are 4 such categories. Export House Trading House Star Trading House Super Star Trading House

Export trading houses

Export trading houses export large volumes of

products from many sources of lower unit costs through established networks of overseas offices.

OBJECTIVES OF TRADING HOUSE

To make available supplies of essential commodities to

consumers at reasonable prices on a regular basis. 2. To ensure a fair price of the produce to the farmers so that there may be an adequate incentive to increase production. 3. To minimize violent price fluctuations occurring as a result of seasonal variations in supply and demand. 4. To arrange for supply of fertilizers and insecticides. 5. To undertake the procurement and maintenance of buffer stock and their distribution whenever and wherever necessary. 6. To arrange for storage, transportation, packaging and processing.

Export and Trading Houses

The criterion used for recognition of an exporter in one of

these categories is the average FOB value or Net Foreign Exchange (NFE) earned through physical exports during the three preceding years or during the preceding year whichever is opted for by the exporters. Recognition as a Super Star Trading House requires exports in a minimum of at least three product groups. In addition to physical exports, other specified exports and services for which payment is received in free foreign exchange also qualify for the purpose of the eligibility criteria. Special weightages are given to certain categories of exports in calculating the NFE earned and assessing the export performance of a company in deciding its classification. The status conferred under these categories is generally valid for three years from April of the licensing year during which the application is made.

Objective
The objective of the scheme is to recognise

established exporters as Export House, Trading House, Star Trading House and Super Star Trading House with a view to building marketing infrastructure and expertise required for export promotion. Such Houses should operate as highly professional and dynamic institutions and act as important instruments of export growth.

Eligibility
Merchant as well as Manufacturer exporters,

Service providers, Export Oriented Units (EOUs)/ units located in Export Processing Zones (EPZs)/ Special Economic Zone(SEZs) /Electronic Hardware Technology Parks (EHTPs)/ Software Technology Parks (STPs) shall be eligible for such recognition.

Criterion for Recognition

The eligibility criterion for such recognition

shall be on the basis of the FOB/NFE value of export of goods and services, including software exports made directly, as well as on the basis of services rendered by the service provider during the preceding three licensing years or the preceding licensing year, at the option of the exporter. The exports made, both in free foreign exchange and in Indian Rupees, shall be taken into account for the purpose of recognition.

Exports made by Subsidiary Company

The exports made by a subsidiary of a limited

company shall be counted towards export performance of the limited company for the purpose of recognition. For this purpose, the company shall have the majority share holding in the subsidiary company.

Export Performance Level

The applicant is required to achieve the

prescribed average export performance level subject to the condition that

paragraph 11.7 shall not be counted for export performance.

a)Deemed exports and exports under

Export consortia
Manufacturers particularly in the small scale

sector can organize themselves into cooperative marketing groups .formation of such cooperative marketing enable the individuals firms to take advantage of joint marketing efforts including joint marketing research and joint shipment

Star export house

The FT policy 2004 -2009 has introduced the

concept of star export house in place of the earlier export / trading houses Eligibility : The following export organisations are eligible to claim star export house status 1.Merchant and manufacturer exporters 2.Service providers 3.EOU 4.Units located in SEZ,AEZ,EHTP,STP & BTP

Status category
The applicant shall be categorized depending

on FOB export performance during the previous 3 yrs

Status FOB(RS. Crore)

One star Two star Three star Four star Five star

15 100 500 1500 5000