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Export Oriented Unit

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At Global Tax Masters, we provide expert assistance in setting up and managing Export Oriented Units (EOUs) under the Foreign Trade Policy (FTP) of India. The EOU scheme is designed to promote exports and facilitate duty-free procurement of inputs, thus enhancing India’s foreign exchange earnings.

What is the Export Oriented
Unit (EOU) Scheme?

The EOU Scheme, launched in 1981, aims to boost exports by offering special incentives and duty exemptions to units that undertake to export their entire production of goods or services.

Entities engaged in the following activities are eligible to apply for EOU status:

  • Manufacturing
  • Service provision
  • Software development
  • Repair, reconditioning, and re-engineering of jewelry and articles
  • Agriculture, animal husbandry, poultry
  • Biotechnology, floriculture, horticulture, and related activities

⚠️ Trading units are not eligible under the EOU scheme.

How to Apply for EOU Status?

To obtain EOU status, the following process is followed

Application Submission

  • Submit an application to the Board of Approval.

Letter of Permission

  • Upon approval, a Letter of Permission is granted.

Implementation Timeline

  • The LOP is valid for 2 years during which the unit must install plant and machinery.

Extension Option

  • A one-year extension may be granted if the unit requires more time.

Net Foreign Exchange Requirement

  • The unit must achieve positive Net Foreign Exchange (NFE) over a cumulative period of 5 years from the commencement of operations.

Customs Duty Benefits for EOUs

Under Notification No. 52/2003-Customs (dated 31.03.2003), EOUs are exempted from the payment of

  • Basic Customs Duty under the First Schedule of the Customs Tariff Act, 1975
  • Additional Customs Duty under Section 3 of the Act

However, as per Notification No. 59/2017-Customs (dated 30.06.2017), the Basic Customs Duty exemption does not apply to inputs used in goods sold to the Domestic Tariff Area (DTA) with GST payment. The exemption for additional duty under Section 3 continues to apply.

Key Benefits Available to EOUs

EOUs are entitled to several facilities that significantly reduce the cost of operations and make exports more competitive:

Duty-free procurement of raw materials and capital goods through import or domestic sources

GST reimbursement on raw materials and capital goods sourced domestically

Reimbursement of excise duty paid on fuel purchased from domestic oil companies

Exemption from industrial licensing, including for items reserved for Small Scale Industries (SSI)

Eligibility for Input Tax Credit (ITC) on goods and services used in the production of export goods

EOU Status under Foreign Trade Policy (FTP)

According to the Foreign Trade Policy, an EOU may be set up with a minimum investment of ₹1 crore in plant and machinery. However, this investment limit does not apply to units engaged in

  • Software and hardware technology parks
  • Information technology and IT-enabled services
  • Biotechnology parks
  • Agriculture, animal husbandry, and handicrafts
  • Handmade jewelry

Why Choose Global Tax Masters for EOU Registration and Compliance?

01.

Over 10 Years of Expertise in FTP and Customs Procedures

02.

500+ Clients Served Across India

03.

End-to-End Assistance with LOP Application, Compliance, and Exit

04.

DGFT and Customs Liaison Support

Exit from EOU Scheme

An EOU can exit the scheme by following these steps:

  • Approval from the Deputy Commissioner (DC) of Customs is required.
  • On exit, the unit must pay applicable duties including:
    • Excise Duty
    • Customs Duty
    • IGST, SGST, CGST, and compensation cess as per prevailing industrial policy.
  • If the unit fails to meet its obligations under the scheme, it may face penalties during exit.

For EOUs in gems and jewellery, any stock of gold, silver, or precious metals must be handed over to an agency designated by the DC at prices determined by the agency.

Get Expert Help with EOU Setup and Compliance

Whether you’re planning to start a new export-oriented business or convert your existing unit into an EOU, Global Tax Masters offers complete consultancy, documentation, and liaison services. From securing permissions to claiming duty benefits and handling compliance, we ensure smooth operations every step of the way.