Introduced in the year 1980 vide the Ministry of Commerce dated 31st December 1980, the main aim of the Export Oriented Unit (EOU) scheme is to increase exports, earn foreign exchange to the country and to generate additional employment. It was introduced as a complementary scheme to the Free Trade Zones/Export Processing Zone (EPZ) scheme introduced in the sixties, which had not attracted many units due to the location restrictions. The exporters showed willingness to set up units with long term commitment to exports under the Customs bond operations provided they had the freedom to locate them in places of their choice and given most of the benefits as provided to units set up in the zones. The EOU scheme adopts the same production regime as the EPZ but offers a wide option in locations with reference to factors like source of raw materials, ports of export, hinterland facilities, availability of technological skills, existence of an industrial base and the need for a larger area of land for the project.

Over the years, the EOU scheme has undergone various changes and its scope has also expanded substantially as compared to the initial scheme, which was basically for the manufacturing sector with certain minimum value addition in terms of export earnings. Presently, the units undertaking to export their entire production of goods are allowed to be set up as an EOU. These units may be engaged in the manufacture, services, development of software, repair, remaking, reconditioning, re-engineering including making of gold/silver/platinum jewelry and articles thereof, agriculture including agro-processing, aquaculture, animal husbandry, bio- technology, floriculture, horticulture, pisciculture, viticulture, poultry, sericulture and granites. The EOUs can export all products/services except prohibited items of exports in ITC (HS).

Some of the benefits that are extended to the EOUs for imparting a competitive edge to compete in the export market are as follows:

• EOUs are allowed to procure raw materials/capital goods duty free, either through import or through domestic sources
• Reimbursement of Central Sales Tax (CST)
• Reimbursement of duty paid on fuels procured from domestic oil companies
• CENVAT credit on the goods and service and refund thereof
• Fast track clearance facilities
• Exemption from Industrial Licensing for manufacture of items reserved for SSI sector.

By Udyog Software Marketing Team

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