EOU

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 internationally competitive duty free environment coupled with better infrastructural facilities for export production. Countrys export performance is about 10%.

Eligibility
An EOU can be set up by any entrepreneur for manufacturing of goods. An EOU can be set up for repair, reconditioning, re-making and reengineering also. Trading activity is not allowed in the EOU Scheme. EOU unit is required to achieve only positive Net Foreign Exchange (NFE) over a period of 5 years.

SALIENT FEATURES
No license required for import. Exemption from Central Excise Duty in procurement of capital goods, rawmaterials, 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 EOUs treated as deemed exports.

100% Foreign Direct Investment permisisible.

SEZ
India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asia's first EPZ This policy intended to make SEZs an engine for economic growth supported by quality infrastructure complemented by an attractive fiscal package, both at the Centre and the State level, with the minimum possible regulations.set up in Kandla in 1965.

The main objectives of the SEZ Act are:

(a) generation of additional economic activity (b) promotion of exports of goods and services; (c) promotion of investment from domestic and foreign sources; (d) creation of employment opportunities; (e) development of infrastructure facilities

Incentives and facilities offered to the SEZs

Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units 100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter External commercial borrowing by SEZ units upto US $ 500 million in a year without any maturity restriction through recognized banking channels. Exemption from Central Sales Tax. Exemption from Service Tax. Single window clearance for Central and State level approvals.