EXPORT ORIENTED UNITS AND EXPORTS PROCESSING
ZONES MAJOR BENEFITS AVAILABLE TO EOUS (100%)/ EPZS
Units undertaking to export their entire production
of goods except for the permitted levels of rejects may be set up
under the EXPORT ORIENTED UNIT (EOU) Scheme or EXPORT PROCESSING
ZONE (EPZ) Scheme. Such units may be engaged in manufacturing ,
production of software, horticulture, agriculture, aquaculture,
animal husbandry or similar activity. Units engaged in service activities
may also be considered on merits.
While the EPZ operating units broadly fall under
the product groups of electronics, engineering items, chemicals
& allied products, Gem & Jewellery, textiles, garments,
plastics and rubber products, EOUs are mainly concentrated in engineering
, Chemcials & plastics, granites, textiles, food processing,
agriculture, aquaculture, steel, forest products, electronics and
minerals / ores.
Export oriented units are characteristically
categorised into three types :
1. 100% Export Oriented Units - Unit established anywhere in India
and exporting 100% of its product(s).
2. Units in Free Trade Zones / EPZ(s) Unit established in any of
the 7 EPZ/ Free Trade Zones in India and exporting 100% of product(s).
3. 100% Export Oriented Unit set up in software technology parks
and electronics hardware parks for development of software and electronics
hardware, software & electronics hardware technology and software
& electronics hardware services for export.
The EPZs / EOU are designed to provide an internationally
competitive duty free environment at low cost for export production
through basic infrastructure facilities like developed land, standard
design factory buildings, built up sheds, roads, power, water supply
and drainage and customs clearance facilities.
Details of exports from EPZs / EOU during
the last 2 years are indicated below :-
Facilities & incentives
The importing / exporting units established
in FTZ / EPZ get the following facilities & incentives.
1. EOUs / EPZ units can import industrial inputs
free of customs duty.
2. 100% foreign equity is welcomed in EOUs / EPZ units.
3. Leasing of capital goods from domestic companies by EPZ / EOUs
4. EOUs / EPZ units can raise foreign currency loans, subject to
A five year tax holiday was allowed to any industrial
undertaking in a FTZ which manufacture or produces any article or
thing. Similarly the entire profits of 100% EOU are exempted from
income tax . Units in FTZs / 100% EOUs are provided economic flexibility.
They are allowed to dispose of the export reject and by-products
to the tune of 25% of total produce in the domestic market. In effect,
such units get exemption for 5 years even in respect profits from
the 25% domestic sales allowed to them.
However this benefit is restricted only to 100%
EOUs /FTZs which export at least 75% of their turnover can avail
of the normal 100% tax exemption to the extent of the export profits
only. This restriction will apply to new units which begin to manufacture
or produce an article on or after 1.5.95.
This is w.e.f. 1st April 1996 & will accordingly
apply in relation to assessment year 1996-97 & subsequent years.
(Source Ministry of Commerce - 1Annual Report
94-95 Govt. of India)
5. Industrial plots and standard design factories
are available to EOUs / EPZ units at concessional rates. For plots
the concession will be 75% for the first year, 50% for the second
year, 25% for the third year, if and only if production had commenced
in the first year or the second year not otherwise.For SDF building
sheds the concession will be 50% for the first year and 40% for
the second year if production had commenced in the first year. The
concession will be 25% for the third year. These concessions are
also only if production had commenced by the end of the first year,
6. FOB Value of exports of EOUs / EPZ units
are allowed to be clubbed with that of parent / associate companies
located in the Domestic Tariff Area (DTA) for the purposed of getting
star Trading House, Export House Status.
7. EOUs / EPZ units are exempted from the payment
of central & state sales tax.
8. Supplies from the Domestic Tariff Area (DTA)
to EOU?s / EPZ units are regarded as deemed exports and are hence
exempted from payment of excise duty which means quality inputs
are available at lower costs.
9. EOUs / EPZ units may export goods through
Star Trading House, Trading Houses and Export Houses.
10. Revision of value addition formula by excluding
indigenous raw materials to make value addition on the basis of
net foreign exchange earnings.
11. Encouragement of agro electronic units by
providing higher domestic access.
12. Broadening the area of activity in EPZs
to include trading, re-export after labelling, repacking, repair,
reconditioning & re-engineering.
13. Allowing private bonded warehouses in the
EPZs to facilitate importing & warehousing goods without payment
of duty & clearing them for house consumption after paying the
customs duty applicable at the time of clearance.
The benefits available to a Free Trade Zone
will be available to industrial undertaking newly established in
a FTZ & manufacturing or producing any article or thing on or
after the 1st April 1995, only if the exports by the undertaking
are not less than 75% of the total sales of articles or things during
the previous year. This is w.e.f. April 1996 & will accordingly
apply in relation to assessment year 1996-97 & subsequent years.
To : Indian Registered Exporters
Sub : Approval of 100% EOU / EPZ Scheme
Please give following details / documents to
enable us to process your application for preparing application
for 100% EOU / EPZ
Nature of Industry (pl. specify
whether Industry falls under schedule I & II or III.)
Rs.5,000/- cash for Demand
Name & Full address of Industrial Undertaking.
Status of Industrial Undertaking (Central
Govt., (State Development Investment Corporation ), Co-operative,
Joint Sector, Assisted Sector Undertaking, Private Sector Individual).
Whether the undertaking is covered under
Whether the undertaking is for new undertaking,
substantial expansion, new articles or conversion of DTA to
Exact location of factory.
Location of factory (backward area, within
25kms from periphery of S.U.A. (Standard urban Area), Industrial
Category of Industry (Polluting / Non-polluting).
Item of manufacture (Description, capacity,
Item Code Sr. No.)
Item is covered by schedule I, II, or III.
Production estimation in quantity unit
(Ist year, IInd year, IIIrd year, IVth year, Vth year)
Realisation of FOB in Rs. & US.$ (Ist
year, IInd year, IIIrd year, IVth year, Vth year)
Estimation of import required in Rs. &
US.$ (Ist year, IInd year, IIIrd year, IVth year, Vth year)
Any special feature of the
project proposal which you want to highlight (Please attach
the Project report, for new units)
Whether any industrial licence
or loi / lop has been issued under EOU / EPZ scheme? If
so, please give full particulars especially reference number,
date of issue , items of manufacture and progress of implementation
of each project.
Whether you have submitted
any other application for loi / lop which is pending with the
board of approval (s) ? if so, please give particulars like
reference number, name under which application made, items of
Whether your firm or nay of
partners / directors who are also partners / directors of another
company or its associate concerns have been debarred from getting
any licence / letter of indent / letter of permission under
the export and import (control) act., 1947 / foreign trade (development
and regulation) act., 1992 or otherwise penalised.
Full name and residential address
of the signatory with designation.
30 - Letterheads duly signed
of right hand side bottom & 15 letterheads unsigned.
One rubber stamp with designation.
Advance Cheque of Rs. 10,000/-
from Rs. 40,000/- being our service charges EOU / EPZ. (Cheque
favouring Bigis Impex Consultancy) and balance within 7 days
on receipt of sanction / approval.
If you have any queries, please feel free to
call or fax us. We will be glad to serve you.