How to set-up an Export Oriented Unit EOU Scheme The needs for higher level of technological and industrial

progress made the Government devise a series of export promotional schemes. EOU & SEZ Schemes are one among them, which provides an internationall competitive dut free environment coupled with !etter infrastructural facilities for export production. Export Oriented Units "EOUs# now constitute a ver important sector in the countr $s Export %roduction scenario. The have !ecome dominant pla ers in our export strateg , and their share in the &ountr $s export performance is a!out '(). The export growth rate of *() compares ver favora!l with the +ational export growth rate. ,ow to set-up an Export Oriented Unit "EOU# .,ow to set-up an Export Oriented Unit "EOU#/ is a step-! -step process. The information is divided into 0 parts1 Eligibility Criteia How to apply Prior to Approval Approval Procedure

A ter Approval !what to do or commencement o Production" #$ E%#&#'#%#() C*#(E*#A +ho is eligible to become an EOU, 2n EOU can !e set up ! an entrepreneur for manufacturing of goods and also for rendering services. 2n EOU can !e set up for repair, reconditioning, re-ma3ing and reengineering also. Trading activit is not allowed in the EOU Scheme. EOU unit is re4uired to achieve onl positive +et 5oreign Exchange "+5E# over a period of 0 ears. %olic for EOU is given in Chapter-6 5oreign Trade %olic and &hapter 6 of ,and!oo3 of %rocedure "7ol. 8 9#

it will discharge the same as well. nature of participation "foreign investment allowed '(()# 2" +hat process do you intend to do i$e$ 3anu acturing4 rendering and export o services or1 2griculture 2nimal . 9f the unit is having outstanding export commitment under the 2dvance .EOU can also !e set up in the following sectors1 2griculture 2nimal .icensing Scheme. duties of &ustoms and &entral Excise alread suffered shall not !e refunded on conversion into EOU. re-ma3ing.us!andr 24uaculture 5loriculture .orticulture %isciculture 7iticulture %oultr or Sericulture <epair. ##$P*#O* (O APP*O/A% 0" Planning your venture1 9s it our own or 9s it with foreign participation and. as per its conditions !efore conversion into EOU Scheme. . re-engineering etc. if so.owever. reconditioning.us!andr 24uaculture 5loriculture . .orticulture %isciculture 7iticulture %oultr or Sericulture Conversion o existing -(A.EPC& !Export Promotion Capital &oods" units to EOU Scheme Existing :T2 units or E%&G units are permitted for conversion into EOU Scheme as one time option. it will !e su! summed in the export performance "E%# of the unit. 9n case there is an outstanding export commitment under the E%&G Scheme.

%a ment for ro alties etc.5" (echnology to be used1 9ndigenous= foreign <elated cost and conditions 6" 7easibility report1 On our own or with help of consultant 8" (he inances involved1 .uirements in target mar<ets1 2n fiscal= non-fiscal !arriers. !uilding construction material is not exempted from dut #. related taxes and levies etc. &apital Goods. =" %ocation o the Unit1 The first thing !efore setting up an EOU the entrepreneur has to decide the location of unit1 i. li3e anti-dumping laws."%lease note.and. Environment clearance needed if unit is located within @0 3ms of an ur!an town 2ccordingl the application will !e su!mitted to the concerned :evelopment &ommissioner under whose Aurisdiction that state comes.uipment to be used1 9ndigenous or foreign "allowed dut free# <elated cost . 2dministration and esta!lishment Others 1 li3e interest on loans. %referential treatment to competitor countries. :" (he import laws and other re. ?uota restrictions. 9" (he current competition overseas1 >ain competitors :emand and price levels. machiner etc. structure. close to port or rail= road. >" Capital goods4 machinery and e. ii. !uildings etc. availa!ilit of raw material and iii.

"%lease note. 02" (he production capacity and spare capacity1 :o ou intend to utiliCe the same ! doing su!-contracting wor3 for other export units in :T2 or Export Oriented Units. :etails of su!-contractors. <elated costs. air-conditioning e4uipment permitted dut free onl if it is essential for production process#. Or there would !e a need for a captive power plant. 08" Pac<aging :etails of pac3aging "pac3aging material allowed without pa ment of dut # Source &ost 09" Power1 Bhether the normal grid could suppl ade4uate power.uired1 Source "allowed dut free# &ost >onthl . 00" (he production process1 Bhether production process re4uires air-conditioning plant. special furnaces or 3ilns etc. :etails and cost. 4uarterl and annual re4uirements.# "allowed dut free# 0:" Other in ormation1 . &ost of power plant 5uel re4uired for captive power plant "e.%G. . 05" Any by-products turned out in the production process1 :etails of ! -products Bhether these would !e exported or sold in :omestic Tariff 2rea ":T2# 06" E luents or waste-material1 . furnace oil. Bhether ou want to get Ao! wor3 done outside the EOU. coal etc.S:. .g.ow do ou propose to treat these or discharge them.0?" (he raw materials and other inputs4 li<e consumables etc$ that would be re.

#/$ APP*O/A% P*OCE-U*E %etter o Permission !%OP" . +ew :elhi. if applica!le <egistration under 5actories 2ct. Ud og Fhavan. 5or sector specific conditions %lease see 2ppendix 'D-'& (Please click here) :: for <s.drawn in favour of The %a & 2ccounts Officer. it will appl in the prescri!ed form "2ppendix 'G-F# to the Zone 2dministration for the same.E The unit= promoter has to appl in the application form. <egistration as a small scale industrial unit. ###$ HO+ (O APP%) 2ll applications are to !e filed with the concerned :evelopment &ommissioner of Special Economic Zone "For jurisdiction of Development Commissioner# 2ppendix 'D-9. >inistr of &ommerce and 9ndustr . 9mport Export &ode1 9f the unit does not have an 9mport Export code "9E&#. 0. 2pprovals of !uilding plan in cases where !uilding is proposed to !e constructed.5irm=compan should !e dul registered and details a!out %roprietor=%artner= :irectors etc. pa a!le at the &entral Fan3 of 9ndia. 2 current account with the !an3 authoriCed to deal in foreign exchange should !e opened. 9nvestment details 0=" 3andatory clearances rom State &overnment1 %ollution clearance certificate. %lease see 2ppendix 'D-'F "Please click here# for documents re4uired ! the :evelopment &ommissioner for approval.and!oo3 of %rocedures in 2ppendix 'D-'2 "Please click here# %roAect <eport including a write up on the !ac3ground of the promoters esta!lishing their credentials and standing. :epartment of &ommerce. <egistration 8cum->em!ership &ertificate "<&>&# should !e o!tained from the office of the concerned :evelopment &ommissioner. Sale tax registration to !e o!tained from the Sale Tax :epartment. to !e given in triplicate given in .(((=.

2 Green &ard will !e issued to the unit ! the Zone 2dministration on re4uest. .UT accepted ! the :evelopment &ommissioner.ist of raw material. re4uired. %roAect <eport indicating stage wise manufacturing process. &op of . Approval rom State &overnment Agencies1 /$ A7(E* APP*O/A% A ter the approval from the :evelopment &ommissioner concerned. The application shall !e accompanied ! the following documents=information1 &op of notification whereunder the place "proposed location of unit# has !een declared as warehousing station under section H of the &ustoms 2ct.O% please see 2ppendix 'D-9E "Please click here# %egal underta<ing !%U(" 2 legal underta3ing in the prescri!ed form underta3ing to a!ide ! the terms and conditions of the . . 'H6@. consuma!les and capital goods etc. :etails of the premises including ground plan. 5or format of .O%# is issued ! the Zone 2dministration within @ wee3s after interview of the promoter ! the 2pproval &ommittee.etter of %ermission ".O% issued ! :evelopment &ommissioner concerned and . 9n case the approved place is not a notified warehousing station. Underta3ing that cost recover and other charges shall !e paid. purchase=rent=lease deed.O9=. the manufacturing and other activities have to !e underta3en under customs !ond for which formal application is to !e made to the Aurisdictional 2ssistant &ommissioner= :eput &ommissioner of the &ustoms= &entral Excise for issuance of a %rivate &ustom Fonded Barehouse . allotment letter from 9ndustrial :evelopment &orporation= 2uthorit "if an # :etails a!out the constitution of the firm=compan including its %roprietor=%artners=:irectors etc.O% has to !e executed ! the unit in format given at 2ppendix 'D-'5 "Please click here ).icence under section 0G and 60 of the &ustoms 2ct.2fter su!mitting the application form and if ever thing is in order. a separate application for issuance of such notification is to !e su!mitted to the &ommissioner of &ustoms through the Aurisdictional 2ssistant &ommissioner= :eput &ommissioner. .

'-0: 'ond1 F-'I !ond is a multi 8 purpose suret !ond which the unit has to execute with the Jurisdictional 2ssistant= :eput &ommissioner &ustoms= &entral Excise on a nonAudicial stamp paper of <s.owever it dose not cover differential dut amount against advance :T2 sale for which a separate !ond is to !e executed. 6=HG &E "+. '-0:.O%=. the re4uisite licence under section 0G and 60 of the &ustoms 2ct will !e issued ! the 2ssistant &ommissioner= :eput &ommissioner &ustoms= &entral Excise on priorit !asis.O21 9mport of Office e4uipment1 >erger of two or more EOU=SEZ Units 9mport of spares and accessories of :G sets . The unit has also to ta3e a &entral Excise >anufacture &ode +o. The !ond amount shall !e e4ual to @0) of the dut foregone on the capital goods re4uired in the next 0 ears plus dut foregone on the value of raw material for a period of * months.O9=. @-*-HG. testing= approval etc.T# dt.A ter veri ication o the premises and relevant documents. Transhipment of import= export of goods dut free !etween port of import= export and units premises. Temporar clearance for repair and displa in exhi!itions. 5ormat of the Fond is prescri!ed under +otification +o. . *((=-. from the Superintendent. &entral Excise to ena!le them to sell in the domestic mar3et. >ovement of dut free goods for Ao! wor3 and return. F-'I Fond is a suret !ond and in case valid suret cannot !e arranged securit K0) of the !ond amount has to !e furnished. (he -evelopment Commissioner is empowered to grant approvals on the ollowing matters1 9mport of additional capital goods Enhancement of production capacit Froad-!anding=diversification &hange in name= constitutions &hange of location=expansion Extension of validit of .'ond covers the ollowing activities1:ut free import= procurement of goods as per relevant notification and warehousing=storage in the unit and their utiliCation.

"<efer to >anual on 9ndustrial %olic & %rocedures for list of these activities#.etter +o. The industrial water suppl is underta3en ! the The unit has to ta3e a registration under the State Government Sales Tax 2ct and &entral Sales Tax 2ct. . 2 limited num!er of cases are referred ! the :evelopment &ommissioner to the Foard of 2pprovals in :eptt. "for application format see appendix 'D-'2# :evelopment &ommissioner is competent to clear=approve all cases within a period of '0 da s. The unit has also to ta3e Small Scale 9ndustr "SS9# <egistration from the :istrict 9ndustries &enter to appl for State Government$s 9nvestment Su!sid . 9n case the unit alread has a registration with the State Sale Tax :epartment the address of the additional premises should also !e endorsed in the registration certificate. @0(@@I=I=HH-5-' dated @(H-'HHH "2nnexure-L9#. Ever Zone has a statutor Single Bindow &learance Foard.ome 2ffairs . Sale of goods in :T2. 9t has also to secure power allocation and wiring approval from the State Electricit Foard. :e-!onding= Exit from EOU scheme. !See Appendix 06-0'" >anufacturing activities re4uiring compulsor industrial licensing and those reserved for the %u!lic Sector.Eligi!ilit certificates for grant of emplo ment visa to low level foreign technicians to !e engaged ! EOUs as per >inistr of . Approval rom State &overnment Agencies1 The unit has to secure approval for its wiring and electrical plan from the Electrical authorities. Approval 3echanism 2ll applications are to !e filed with the :evelopment &ommissioner concerned. of &ommerce for approval. 9n case there are effluents or emissions the unit has to secure approval form the %ollution &ontrol Foard. if the application is otherwise in order.

"See >anual on 9ndustrial %olic and %rocedures at www.etter of %ermission is valid for a period of three ears within which the prospective investor is re4uired to execute the . The :evelopment &ommissioner is also competent to approve all cases involving 5:9 "5oreign :irect 9nvestment# falling under the automatic route. of 9ndustrial %romotion & %olic . On approval of a proposal. &ases in which location of a proAect not covered ! the locational restrictions as notified ! :eptt.indmin."&lic3 here for !ond 'I# .etter of 9ntent to the unit concerned. the :& recommends the case to the 59%F "5oreign 9nvestment %romotion Foard# in :E2.Service activities other than Software and 9T ena!led services.etter of %ermission=. the :evelopment &ommissioner issues a . "for details see 2ppendix 'D-'E# vThe .nic.in# 5or cases not falling under the automatic route.egal Underta3ing and common products "for details see2ppendix 'D-'5# The 9nvestor is re4uired to execute a !ond with &ustom and Excise :epartment.

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