Introduction
This scheme was introduced by Ministry of commerce in 1980. It was introduced as a complementary scheme to the FTZ/EPZ introduced in the sixties, which had not attracted many units due to location restrictions.
• It adopts the same production rule but offers a wide option in location with reference to factors like
Sources of raw materials
Ports of exports
Availability of technological skills
Existence of an industrial base
Need for a larger area of land for the project.
Objectives of the EOU scheme
1. To increase exports
2. Earn foreign exchange to the country
3. Transfer of latest technologies
4. To generate additional employment
5. Stimulate direct foreign investment
6. Domestic Labor law is applicable
7. Free to select the location of a project
Obligation of EOU
The EOUs are required to achieve Positive Net Foreign Exchange Earning (NFE).
NFE shall be calculated progressively for a period of Five years from the date of commencement of production.
Input / output norms to be maintained as per FTP on the resultant product.
Unutilized material can be disposed on payment of applicable duties.
Benefits of EOU
All the imports to units are customs duty free.
freedom 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 allowed.
compensation 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.
free from paying electricity duty.
Fast Track Clearance Scheme (FTCS) for clearances of imported consignments for EOU.
Sub-contracting to DTA (Domestic Tariff Area) units allowed after obtaining permission on
annual basis.
Unutilized raw material can be disposed of on payment of applicable duties.
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 (Exchange Earners' Foreign Currency Account) account in foreign exchange.
EOUs can export through an export house/trading house/star trading house or other EOUs.
Major Sector in EOU
1. GRANITE
2. TAXTILES /
3. GARMENTS
4. FOOD PROCESSING
5. COFFEEE
6. COMPUTER SOFTWARE
7. CHEMICALS
8. GEM
9. JEWELLERY
10. PHARMAC
11. ENGINEERING GOODS
12. EUTICALS
Eligibility criteria
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 re-engineering 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.
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