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EXPORT ORIENTED UNITS SCHEME | Company Vakil

EXPORT ORIENTED UNITS SCHEME

In India, the Export Oriented Units scheme was initially introduced with the motive to boost exports, increase foreign earnings and create employment within the country. The Export Oriented Units scheme is a scheme which complements the schemes for Free Trade Zone and Export Processing Zone. Only the units which are undertaken for exporting their entire production of goods, are allowed to setup as a Export Oriented Units. The whole scheme is discussed in detail below.

As mentioned above, the export oriented units are the units which are undertaken to export their entire production of goods. Export Oriented Units can be engaged in numerous and a variety of productions, for example, manufacturing, services, development of software, repair, remaking, reconditioning, re-engineering, also, including the making of gold / silver / platinum jewellery and other articles. In addition to this, units involving the productions related to agriculture, agro-processing, aquaculture, animal husbandry, bio-technology, floriculture, horticulture, pisciculture, viticulture, poultry, sericulture and granites also come under the category and status of Export Oriented Units.

Advantages of these Export Oriented Units:

First, the Export Oriented Units are allowed to obtain raw material to make goods and/or capital good duty free. These are procured either through import or through domestic sources.
Second, the Export Oriented Units are eligible for reimbursement of Goods and Sales Tax (GST).
Third, the fuels which are obtained from domestic oil companies have to pay a duty, these units are eligible for reimbursement of duty paid.
Fourth, input tax credit on the goods and services and refund thereof, can be claimed by export oriented.
In addition to this, fast track clearance facilities are also available.
And lastly, there is an exemption from industrial licensing for manufacture of items reserved for SSI sector.

For being eligible to be accorded with the status of Export Oriented Units, the project that is to be undertaken must have an investment which should be a minimum investment of ₹1 crore for plantation and machinery. However, software technology parts, electronics hardware technology parks and bio-technology parks are exceptions for the application of this condition. Also, the Export Oriented Units which are involved with the productions of handicrafts, agriculture, animal husbandry, information technology, services, brass hardware and handmade jewellery do not require any minimum investment criteria.

Obtaining EOU Status

In order to procure an Export Oriented Unit status, the application for setting up of unit under this scheme must be sent to the the Board of Approval. When it is approved, the Board would send a validity of Letter of Permission for setting up of the units. This Letter of Permission which is provided has an initial validity of 2 years, in order to enable the unit to construct the plant and install the machinery. To extend this period, an extension can be obtained for a period of upto one year. On starting operation, during the period of 5 years, the Export Oriented Units will have to achieve positive net foreign exchange earning cumulatively.

For more information, visit Company Vakil 

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