Export Oriented Unit (EOU)

Introduction:
Export-oriented units are units undertaking to export their entire production of goods. It can
engage in manufacturing, service, development of software, repair, remaking, recondition, re-
engineering including making of gold/silver/platinum jewellery and articles. Units involved in
agriculture, agro-processing, aquaculture, animal husbandry, biotechnology which can also obtain
the status of EOU.
Objective of the Export Oriented Unit:
1. To increase exports
2. Earn foreign exchange to the country
3. Transfer of latest technology
4. To generate additional employment
5. Stimulate direct foreign investment
6. Domestic labor law is applicable and
7. Free to select the location of a project.

Benefits of Export Oriented Units:

1. EOUs has a permit to procure raw materials 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 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 item reserved for SSL sector.

Important facts to remember while setting up EOU:

1. Minimum Investment: An investment of at least one crore (minimum) must be put into plant
and machinery. The criterion is not applicable for the software technology, electronic hardware
technology and biotechnology parks. A minimum investment is
also not compulsory in case of EOUs that deal in agricultural, information technology and etc.
2. Setting up an EOU: The application for setting up an EOU is made to the Board of Approval,
on whose approval, a letter of permission for setting up the EOU is given.
3. Location: The location of EOU should be at-least 25 km from standard urban area limits
unless it is set up in an industrial area or deals in a no-polluting or service.
4. Special license: Special license, through an application to the development commissioner, is
required for setting up an EOU for sector like weapon and defense equipment, atomic,
psychotropic substance and certain alcoholic product.

Major Sectors in EOUs:

• • Food Processing
• • Coffee
• • Pharmaceuticals
• • Gem & Jewellery
• • Electronics
• • Chemical
• • Textiles
• • Computer Software
• • Marine Product
• • RMG of all textile
• • Petroleum Product
• • Plastic
• • Handmade Product
• • Granite

Statistical Data of Export (25/2/2020):

According to the data of The Directorate General of Commercial Intelligence and Statistic
(DGCI&S), Kolkata, under the Ministry of Commerce, Government of India, the statistic of
the India’s Trade and Exports are:
In this figure we can see the export items engineering goods, petroleum product, gems &
jewellery, organic chemical, drug & pharmaceuticals and etc. In the figure we can see the
changing of growth rate percentages of the product and difference of growth rate between two
export years.
Example: Here the electronic goods rate was 33.09% in the year of April 18- November 18 but
next export year it increased 9.44% and it became 42.53% in the year of April 19 - November 19.
On the other hand, for the engineering good it became decrease in April 18- November 18, the
growth rate was 7.31% but in April 19 - November 19 it became -2.15%.
Figure 1
Figure 2 is all about Major Components of India’s exports in November 19. From here we can
see most exported components of India in November 19. From the figure we can find out the
most exported product and its percentage. According to the data, the most exported product was
Petroleum product and lowest is electronic goods but according to the growth rate data the
difference is electronics goods growth rate is increasing in every export year in the comparison of
other product.
Figure 2
Figure 3 is showing us the Monthly Export Performance. From here we can get the difference
between two yeas monthly performance. Here we can on the month of March the performance of
2018-2019 year is better than the year of 2017-2018. But in the month of September the 2017-
2018 year’s performance is better than 2018-2019 year.
Figure 3
Figure 4
Figure 4 is showing us the Region wise breakup of India’s Exports (in Billion USD) in
November 19 vis-à-vis November 18. According to the statistical data, In November 19 the
most breakup got from the North America region and that is 4.90801 Billion USD which was
4.28657 Billion USD in previous year that means the increasing rate is approximate 14.50%
which is showing us the increasing demand of India’s products in these regional countries. On the
hand, in breakup is decrease in Asian Countries in 2018 it was 3.15604 Billion USD but in
2019 it became 2.71362 the increase percentage is -14.02%. So the government should take care
of this matter.
Figure 5
From Figure 5 we get the trade performance and difference between April-November 18 and
April-November 19 trade performance. Here we see that India’s import is greater than export.
The difference is decreasing in every year but it effected the India’s economy.
India’s Total Export shared by EOU:
Students point of view:
EOU schemes are using to increase the export growth into the foreign country so that income
from the export can be increased so that the government can make over the import cost. The EOU
is doing it very well. According to the data the EOU is able to increase the growth rate in some of
the department but at the same time they failed to keep the previous year’s income which is
creating an impact into the India’s Economy. So the government should take some necessary step
so that the EOU can increase the growth rate of all department with that they can able to keep the
previous year income.
Conclusion:
EOU scheme is one of the leading export promotion schemes in India. Export Oriented Units are
provided with a number of incentives and concessions. This incentives and concessions motivated
a large number of entrepreneurs to start EOUs. Export by EOUs had made a steep growth till
2007-08. Government of India had forgone significant customs revenue amounting 32,932 crore
rupees during 2009-10 to 2013-14 on EOU schemes. But now EOU schemes is not able to attract
entrepreneurs and it is not contributing to the growth as envisaged while forgoing substantial
duty. By taking into account the unique advantages of the EOU scheme, The Central Government
has to make necessary steps to revamp the EOU Scheme.