All About Export Oriented Unit Scheme

EOU scheme is abbreviation of Export Oriented Units (EOUs) scheme. The EOUs scheme introduced in early 1981 is complementary to the SEZ scheme.

EOU scheme is abbreviation of Export Oriented Units (EOUs) scheme. The EOUs scheme introduced in early 1981 is complementary to the SEZ scheme. It adopts the same production arrangement provide a broad option in locations with reference to factors such as source of raw materials, ports of export, hinterland facilities, availability of technological skills, existence of an industrial base & the requirement for a larger area of land for the project.

Export Oriented Unit Scheme is count as one of the export promotion schemes of the Government of India. Sector Specific EOU scheme are also known as STP (Software Technology Park) scheme for export of software; or EHTP (Electronic Hardware Technology) Park Scheme for export of electronic Hardware; or BTP (Bio-technology Park) Scheme for export of Bio Technology Products.

Under Export Oriented Units Scheme, manufacturing or service sector units are allowed to be set up with the objective of exporting entire production of goods manufactured or services except limited sale in DTA (Domestic Tariff Area) as provided under the FTP (Foreign Trade Policy).

What are the Objectives of the Export Oriented Unit?

The primary objectives of the EOU scheme is to enhance exports, gain foreign exchange to the country, transfer of latest technologies stimulate direct foreign investment and to create additional employment.

What are the Major Sectors in EOUs?

These below mention are the list of major sector in EOUs:-

  1. Granite
  2. Textiles / Garments
  3. Food Processing
  4. Chemicals
  5. Computer Software
  6. Coffee
  7. Pharmaceuticals
  8. Gem and Jewelry
  9. Engineering Goods
  10. Electrical and Electronics
  11. Aqua and Pearl Culture

What are the Benefits of Export Oriented Units?

The Export Oriented Units (EOU) contains these following benefits:-

  1. EOUs has a permit to procure raw material or capital goods duty-free, either through import or through domestic sources;
  2. EOUs are eligible for reimbursement of GST;
  3. EOUs are eligible for reimbursement of duty paid on fuels procured from domestic oil companies;
  4. EOUs are eligible for claiming input tax credit on the goods and services and refund thereof;
  5. Fast track clearance facilities;
  6. Exemption from industrial licensing for the manufacture of items reserved for SSI sector.

What is the Eligibility Criteria for EOU?

For the status of EOU, the project must have a minimum investment of INR 1 crore in plant & machinery. This condition does not apply for STP (software technology parts), electronics hardware technology parks & biotechnology parks.

Export Oriented Units involved in handicrafts, agriculture, animal husbandry, information technology, services, brass hardware & handmade jewelry do not need to follow any minimum investment criteria.

How to Obtain EOU Status?

To earn EOU status, application for setting up of unit under EOU scheme must be made to the Board of Approval.

 In the case of approving, they endow validity of Letter of Permission for setting up EOU. The Letter of Permission will have an initial validity of two years to enable the unit to construct the plant and install the machinery.

Further, a person can take an extension for a period of upto 1 year. On starting operation, in a period of five years, the EOU will have to achieve positive net foreign exchange earning cumulatively.

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