Setting
up 100% Export Oriented units/units in Export Processing
Zones
Introduction
100
per cent Export Oriented Units (EOUs) and units in the
Export Processing Zones (EPZs), enjoy a package of incentives
and facilities, which include duty free imports of all
types of capital goods, raw material and consumables
in addition to tax holidays against export.
Permissions
for setting up 100 per cent EOUs and units in EPZs are
granted through the automatic route or by the Government.
Automatic
Route
The
Development Commissioners (DCs) of EPZs/Free Trade Zones
(FTZs) accord automatic approval to projects where
- items
do not attract compulsory licensing;
- where
the location is in conformity with the prescribed
parameters;
- the
units undertake to achieve exports and value addition
norms as prescribed in the Export and Import (EXIM)
Policy in force;
- the
CIF value of imported capital goods is financed through
foreign equity, or foreign exchange required for import
of plant and equipment (net of taxes) is within Rs.
100 Million, and in the case of import of second hand
goods if an Import Licence is not required;
- where
the foreign technology agreement if any, envisages
a lump sum payment not exceeding US $ 2.00 Million
and royalty payment up to 8% on exports and 5% on
DTA sales (net of taxes) over a period of 5 years
from the date of commencement of commercial production;
- where
the exports are to general currency/hard currency
areas;
- where
the unit is amenable to bonding by customs authorities;
and
- the
unit has projected the minimum export turnover, as
specified in the Handbook of Procedures, Vol.1.
- All
proposals for FDI/NRI/OCB investments in EOU/EPZ units
qualify for approval through automatic route except
those where FIPB approval is required.
Conversion of existing Domestic Tariff Area (DTA)
units into EOU is also permitted under automatic route,
if the DTA unit satisfies the parameters mentioned
above and there is no outstanding export obligation
under any other Export Oriented scheme of the Government
of India.
Government
Route
All
proposals which do not meet any or all of the parameters
for automatic approval need to be considered and approved
by the Government. All proposals for FDI in EOUs and
units in EPZ/FTZ falling under FIPB route, need to obtain
Government approval.
Procedures
for Approvals for EOUs/units located in EPZ/FTZ.
Applications
in the prescribed form (Appendix 16 or 16-A of the Handbook
of Procedures, Vol.I) should be submitted to the Development
Commissioners (DCs) of the EPZ concerned for automatic
approval and to the S.I.A. for Government approval.
The application should be submitted in 3 copies along
with a crossed demand draft of Rs.5000/- drawn in favour
of the "Pay & Accounts Officer, Department
of Industrial Development, Ministry of Commerce and
Industry", payable at the State Bank of India,
Nirman Bhavan Branch, New Delhi.
Procedure
for Automatic Approval
Applications
in the prescribed form should be submitted to the DCs
of the EPZs. Wherever, the proposals meet the criteria
for automatic approval, as given above, the DC of the
EPZ would issue approval letters within 2 weeks. All
other proposals shall be forwarded by the DC to the
Board of Approvals for EOUs for consideration.
Procedure for Government Approval
Applications
in the prescribed form should be submitted to the S.I.A.,
Department of Industrial Policy & Promotion, Udyog
Bhavan, New Delhi. On consideration of the proposal
by the Board of Approvals, a decision would be normally
conveyed in 6 weeks.
Procedure
for foreign direct investment/NRI investment
All
proposals for FDI/NRI/OCB investment in 100% EOU/units
located in EPZ/FTZ are eligible for approval under automatic
route subject to the prescribed parameters. For proposals
not covered under automatic route, the applicant should
seek approval of the FIPB.
Minimum
NFEP and EP requirement
Under
Para 9.5 of the Export-Import Policy, the minimum Net
Foreign Exchange earning as a Percentage of exports
(NFEP) and the minimum Export Performance (EP) have
been specified in Appendix I of the Policy. Items of
manufacture for export specified in the Letter of Permission
(LOP)/Letter of Intent (LOI) alone are taken into account
for calculation of NFEP and EP.
Importer-Exporter
Code Number
The
unit shall be required to obtain an Importer-Exporter
Code Number (I.E.C. No.) in terms of Para 4.9 of EXIM
Policy. Application in the Form prescribed in Appendix
2A of the Handbook of Procedures along with the Profile
of Importer/Exporter in prescribed form Appendix 1A
of the Handbook is to be filed with the office of the
D.G.F.T.
Legal
Undertaking
As
per Para 9.6 of EXIM Policy, the approved unit shall
be required to execute a legal undertaking with the
Development Commissioner concerned in the Form given
in Appendix 16B or 16BB as the case may be.
Green
Card
Green
Card will be issued by the DC concerned to the unit
automatically after execution of the Legal Undertaking.
This card will entitle the holder to the following facilities:
- Automatic
licensing as mentioned in para 4.26 of the Handbook.
- Automatic
Customs clearance.
- Automatic
Customs clearance for imports related to exports.
|
