Revamping EOUs - Committee submits Report
EXPORT Oriented Scheme (EOU) was introduced in 1981 and is complementary to the SEZ scheme (erstwhile EPZ scheme). It adopts the same production regime but offers a wider option in location with reference to factors like source of raw materials, port of export, hinterland facilities, availability of technological skills, existence of an industrial base, and the need for a large area of land for the project.
Salient features of the Scheme:
++ Exemption from Central Excise Duty in procurement of capital goods, raw materials, consumables spares etc. from the domestic market.
++ Exemption from customs duty on import of capital goods, raw materials, consumables spares etc.
++ Reimbursement of Central Sales Tax (CST) paid on domestic purchases.
++ Supplies from DTA to EOUs treated as deemed exports.
++ Reimbursement of duty paid on furnace oil, procured from domestic oil companies to EOUs as per the rate of drawback notified by the Directorate General of Foreign Trade.
++ 100% Foreign Direct Investment permissible.
++ Facility to retain 100% foreign exchange proceeds in EEFC Account.
++ Facility to realize and repatriate export proceeds within twelve months.
++ Access to Domestic Market upto 50% of FOB value of export on concessional rate of duty.
++ Job work on behalf of domestic exporters for direct export allowed.
++ Conversion of existing Domestic Tariff Area ( DTA) unit into an EOU permitted.
Over the last thirty years the EOUs have contributed enormously to our exports, but there have also been large-scale evasion and fraud.
In January 2011, the Government had set up a Committee under the Chairmanship of the NOIDA SEZ, SC Panda review/revamp of EOU Scheme in view of the current challenges and changing global business environment. (Please see )
The Committee has submitted its report recommending fiscal measures, policy initiatives, procedural simplifications and steps to reduce transaction cost to arrest the declining trend in setting up of EOUs and their exports. The Committee has also recommended exemption from Service Tax. Rationalisation of Administrative mechanism, warehousing facilities outside the units, export status on par with SEZs, job work for DTA units are some of the other recommendations.