EOU/EHTP/STP/Biotech Parks

By:Ashfaque Husian Nagpurwala -075 Tapas Kolte -149 Vikas Shah Payal Choudhary -130 Harshita Goel

Export Oriented Units (EOU's)

INTRODUCTION ON EOU
Introduced

-31st December 1980

-by Ministry of Commerce and industry,

Govt.
Why??

of India

-To boost exports by creating additional

production capacity

Deciding authority: BoA

Eligibility
Units undertaking to export their entire production of goods and services. (manufacture, repair, re-make, recondition, re-engineer, render services.)

+ve Net Foreign Exchange- NFE for 5 years

Key Points
EOUs can get a location of their choice Customs-bonded anywhere in India. EOUs can import without duties, all capital goods and raw materials for running the unit EOUs can sell up to 50% of FOB value of exports in the Indian market at concessional duties

Approvals for EOUs

Trading not permitted. Minimum Investment for approval as an EOU should be Rs.10 million in plant &machinery
Licenses are required

Preparation for Registration

Decision on various fronts like type, location etc.

Obtaining environmental clearence

Obtaining bank acc. For foreign exchange Obtaining sales tax registration Obtaining govt. clearences Getting PAN number Getting IE Code

Procedure Of Registration
1

Documents along with the application

2 3

Grant of registration to EOUs (5 Days)

Issue Of Certificate

1. Documents
Total 6 Documents Required
copy of LOP (letter of Permission) Copy of Private Bonded Warehousing License

issued under section 58 of the Customs Act, Bank attested signatures of authorized signatories of the EOU/EHTP/STP unit. Passport size photograph of Director/Proprietor/signatories Copy of IEC No Copy of green card Copy of Legal Agreement For 100%EOU

Letter of Permission

Private Bonded Warehousing License

Green Card

Transfer of Goods
(A)

Transfer of manufactured goods from one EOU to another is allowed with prior intimation to concerned DC and Customs authorities
(B) Capital goods may be transferred or given on loan with prior intimation to concerned Development Commissioner and Customs authorities. (C) Goods supplied by one unit to another shall be treated as imported goods for second unit for payment of duty, on DTA sale by second unit.

Major Sectors of EOU

GRANITE TEXTILES / GARMENTS FOOD PROCESSING CHEMICALS COMPUTER SOFTWARE

COFFEE
PHARMACEUTICALS GEM & JEWELLERY ENGINEERING GOODS ELECTRICAL & ELECTRONICS AQUA & PEARL CULTURE

Inter unit Transfer

(A) Transfer of manufactured goods from one EOU to another is allowed with prior intimation to concerned DC and Customs authorities. (B) Capital goods may be transferred or given on loan to other EOU with prior intimation to concerned DC & Customs authorities.

(C)
Goods supplied by one unit of EOU to another unit shall be treated as imported goods.

EOUs and Foreign Exchange

(A) EOUs may freely repatriate investment & returns abroad (B) EOUs may invoice sales to other EOUs etc in foreign exchange (C) EOUs need to bring export proceeds to India only within 360 days of export .

Exit from EOU

With approval of DC, an EOU may opt out of scheme. If unit has not achieved obligations, it shall also be liable to penalty at the time of exit.
An EOU/EHTP/STP/BTP unit may also be permitted by Development Commissioner, to exit from the scheme at any time on payment of duty on capital goods under the prevailing EPCG Scheme for DTA Units. Unit proposing to exit out of EOU scheme shall intimate DC and Customs and Central Excise authorities in writing.

An EOU / EHTP / STP / BTP Unit may also be permitted by Development Commissioner to exit under Advance Authorization as a one time option.

Who can Operate

To run manufacturing activities foreign companies need to set up an Indian Company A Company registered in India can start an EOU unit without starting a new legal entity: separate accounts suffice.

Benefits of EOU
No payment of Income Tax

Imports => customs duty free.

No Central Excise on Capital Goods and Raw

Materials from domestic market. 100% of foreign equity is permissible. Reimbursement of Central Sales Tax Exemption up to 90% from Income-tax Full Freedom for sub-contracting. Exemption from the payment of Electricuty duty.

Benefits of EOU
Fast Track Clearance Scheme (FTCS) for

clearances of imported consignments for EOU. In certain cases, excise duty payable will be only 50%/30% of normal 100% exemption on sales tax Job work for exports is permitted Supplies made to EOU by Indian supplier are deemed exports No restrictions on managerial remuneration No restrictions on External Commercial Borrowings

EOU 04 V/S 09
Procurement and supply of export promotion

material of 1 .5% of FOB value of previous years exports is allowed. Goods imported shall be used only for export production Time limit for export of Gold/silver/ platinum jewelry increased from 60 days to 90 days Procurement and export of spares/components, increased from 1.5% to 5 %

EOU 04 V/S 09
Sectors other than Gems & Jewellery may

import/procure 5% FOB(PFY) value without payment of duty. units which are manufacturing and exporting more than one product can sell 90% of FOB of any of these products into DTA. Unit will not be required to furnish bank guarantee at the time of import, where unit has
(i) a turnover of Rs. 5 crores or above (ii) unit is in existence for at least three years

Electronic Hardware Technology Park (EHTPs)

ABOUT EHTPs
The EHTP Scheme is a 100% Export Oriented

Scheme for undertaking manufacturing of electronic hardware equipment/components in India. An Electronic Hardware Technology Park (EHTP) may be an individual unit by itself or a unit located in an area designated as EHTP Complex. The EHTP Scheme is also administered by the Ministry of Communications & Information Technology.

Import benefits. Duty free and bonded areas.

BENEFIT S GRANTE D TO EHTPs.

Exemption from payment of corporate income tax and also sales tax reimbursement. 100% foreign equity allowed. Supplies made by DTAs to EHTPs to be treated as deemed exports.

EHTP unit maybe setup for both hardware and software in an integrated manner.
No excise duty levied on purchase of indigenous goods.

Minimum Export Obligation

As per the EXIM policy, 2002-07, an EHTP shall

be a net foreign exchange earner.

It is calculated cumulatively for a period of 5

years.
Positive NFE = FOB value of exports-(sum total of

CG imported + value of payments made in foreign exchange)

Criteria for automatic approval

The unit shall meet the requirements of the

custom authorities. It is amenable to bonding by the customs. All the manufacturing operations are carried out in the same premises.
However, the unit may be permitted to sub-contract

part of their production process.

REGISTRATION PROCEDURE
The application for setting up a unit must be duly

filled with signatures and rubber stamp on each page of the application. An application fee of 2500 is to be paid. The project report must contain details about:
Company profile, promoters background, services

offered, marketing strategy, manpower plan, future plans, financial statements, finance details, projected financial statements, export workings.

REGISTRATION PROCEDURE
The MOA and AOA of the company is to be

submitted. Once the director acknowledges the receipt of the application, a reference no is given to each application. The applicant is the required to give a presentation on his B plan in the EHTPI office. On approval, letter of permission is issued to the units. Now, the unit needs to undertake the following:
Execution of legal agreement. Custom bonding.

Software Technology Parks (STPs)

Bio - Technology Parks (BTPs)

Bibliography
http://www.manupatrafast.com/articles/PopOpenArticle.aspx?ID=

1e624d8f-68d8-4b81-89e643d6973395f7&txtsearch=Subject:%20Indirect%20Tax http://www.ieport.com/Customs_manual/customs-manual2012(25).PDF http://www.eouindia.gov.in/epc_cir_2004_2005_76.htm http://www.stpi.in/index.php?langid=1 http://en.wikipedia.org/wiki/Software_Technology_Parks_of_India http://www.stpp.soft.net/ http://deity.gov.in/content/stpi http://www.eximguru.com/exim/software_techanology_parks_stp s/ch_1__stps_introduction.aspx http://www.nsic.co.in/stp.asp http://www.indiasoft.org/2013/index.php?option=com_content&vi ew=article&id=558:software-technology&catid=43:exhibitingcompanies http://www.thehindubusinessline.com/industry-andeconomy/software-technology-parks-to-offer-incentives-to-smallunits/article4995693.ece

Bibliography
http://www.biospectrumindia.com/biospecindia/ne

ws/156202/biotech-parks-india http://dst.gov.in/whats_new/press-release07/biotechnology-park.htm http://www.nistads.res.in/indiasnt2008/t3infrastruc ture/t3inf7.htm http://dbtindia.nic.in/link/admin/admin_view_link2. asp http://216.81.76.51/dnaclub/ http://sbiri.nic.in/ http://btisnet.gov.in/ www.rbi.org.in