Export Oriented Units (EOUs) | Meaning & The Complete Processby Sarika Verma digital marketing
Export Oriented Units (EOUs) | Meaning & The Complete Process
The full form of EOU is Export Oriented Units. Introduced in 1981, the scheme aims to increase exports from India, to thereby increase foreign exchange earnings and create employment. This scheme also complements other schemes such as Free Trade Zone (FTZ) and Export Processing Zone EPZ in India. The provisions of Chapter 6 of the Foreign Trade Policy and its procedures are applicable to EOU, as well as to Electronics Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Bio-Technology Parks (BTPs). In common parlance, EOU/STP/EHTP/BTP are together called the EOU scheme. Export-oriented units are units undertaking to export their entire production of goods. EOUs can engage in manufacturing, services, development of software, repair, remaking, reconditioning, re-engineering including making of gold/silver/platinum jewelers and articles. Further, units involved in agriculture, geoprocessing, aquaculture, animal husbandry, biotechnology, floriculture, horticulture, pisciculture, viticulture, poultry, sericulture and granites can also obtain the status of EOU.
1. Objectives of the EOU scheme
The EOU plot gives units a biological system that is favorable for them. They are given different waivers and inclinations in consistence and tax assessment matters, making it simpler for them to direct business. Sends out lead to an inflow of unfamiliar trade, which assists the country with advancing its financial position. By empowering trade situated organizations, the plan likewise means to create extra work through the product area. EOUs were additionally expected to further develop the inventory network beginning with the obtainment of unrefined components to the stock of completed items to the DTA. Trade likewise implies a possible overhaul in the quality and administration, so the EOU plot was additionally expected to rouse mechanical progressions and expertise advancement in the country. The Export Oriented Units (EOU) plot was acquainted with help sends out, increment unfamiliar profit and made work in India. The EOU conspire is integral to the plan for Free Trade Zone, Export Processing Zone. Units that are embraced to send out their whole presentation of products are permitted to set up as an EOU. In this article, we take a gander at the Export Oriented Units plot exhaustively.
2. Benefits of Export Oriented Units
- They can obtain unrefined substances and capital merchandise through homegrown sources or import without paying any obligation on the buy
- They can guarantee repayment on GST sums they pay
- On the off chance that they have paid obligation on the acquisition of fuel from homegrown oil organizations, they can guarantee a discount on something very similar
- EOUs are permitted to guarantee an info tax reduction on labor and products
- EOUs appreciate need premise leeway offices
- EOUs are not expected to acquire the modern authorizing which is expected for assembling things that are saved for the SSI area
3. Significant realities to recollect while setting up an EOU
Setting up an EOU The application for setting up of an EOU is made to the Board of Approval, on whose support, a Letter of Permission for setting up the EOU is given. This letter permits both of you years for advancement of plant and foundation of contraption, which can be also loosened up by another year. At the point when errands start, the EOU ought to achieve positive new exchange five years or less.
Least Investment To anticipate what is going on with an EOU, a hypothesis of somewhere near one crore (least) ought to be set into plant and device. This premise isn't applicable assuming there ought to emerge an event of programming development parks, contraptions gear advancement parks and biotechnology parks. Furthermore, a base endeavor is in like manner not compulsory in the event that there ought to be an event of EOUs that plan in cultivation, animal development, handicrafts, information advancement, metal gear, organizations and handmade diamond sellers.
Region The region of an EOU should be something like 25 kilometers from standard metropolitan district limits with the exception of on the off chance that it is set up in a cutting edge locale or game plans in a non-dirtying thing or organization.
Ventures where EOUs are molded Initially EOUs generally focused on organizations like materials, food taking care of, devices, artificial materials, plastics and minerals. In any case, all through the drawn out EOUs have been set in the mind-set for gathering, planning, important metals, cultivating and banded together regions, organizations, programming, trading, etc. moreover.
Unprecedented License Special grant, through an application to the Development Commissioner, is normal for setting up an EOU for regions like weapons and watchman equipment, atomic, sedatives, psychotropic substances, and certain weighty consumer and tobacco-related things.
Holding Period EOUs are approved to manufacture product and item inside a sustained season of five years. This period can be connected by five extra years by the Development Commissioner however five extra years at whatever point referenced by the EOU to the Commissioner/Chief Commissioner of Customs
4. Difference between EOU and SEZ
Although the EOU and SEZ have begun to stimulate exports, there are differences between them. An EOU can be set up anywhere in the country as long as it meets the criteria of the system. On the other hand, SEZ is a specially defined enclave, which is considered outside the customs jurisdiction and therefore as foreign territory. Therefore, any sales made from SEZ to DTA are considered as exports, while any sales made from EOU to DTA are considered normal from SEZ to DTA, compared to sales from EOU to DTA.
As a clearly identified area, there is sufficient control over the physical movement of objects to and from the SEZ, but not the same is said of the EOU. In terms of taxability, an SEZ-based institution is not required to pay tax, while an EOU is required to pay tax so that it can later be claimed as a refund.
5. GST for export-oriented units
The supplier must charge the GST for the items delivered by the EOU. In this regard, the EOU may claim an input tax credit from the GST when supplying supplies to the DTA, or argue that the EOU must pay the GST on sales to be made to the DTA, unless they are zero rate sales. Deliveries without GST. It should be noted that GST applies even if it is sold from one EOU to another, as such a transaction is considered a normal sale for GST law purposes. In particular, the primary duty does not apply to EOUs as far as imports are concerned.
6. Impact of EOUs on exports
The positive impact of the EOU plan was recorded in the first two decades of its existence until the creation of the SEZ plan. Fast forward to the next decade and its share of total exports declined and became negative. This was in 2011-12, at a time when tax benefits were being taken under the Income Tax Act. EOUs give exporters the freedom to set up and export businesses in areas of their choice, unlike free trade zones and export processing zones, which have site-specific restrictions. It also provides exporters with a wide range of industries from which to choose when setting up their export-oriented units.
Qualification Criteria for EOU
For the situation with EOU, the undertaking should have a base venture of Rs.1 crore in plant and hardware. This condition doesn't have any significant bearing for programming innovation parts, gadgets equipment innovation parks and biotechnology parks. Further, EOU associated with painstaking work, agribusiness, creature farming, data innovation, administrations, metal equipment and handcrafted gems has no base venture rules.
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Created on Jun 20th 2022 02:02. Viewed 116 times.