The technological growth of our country has led to a better industrial infrastructure. We have come a long way from breaking rocks with a hammer and are now using some really sophisticated machinery and plants for production of goods. New innovations are being brought in every day. This has made the government extremely optimistic regarding our productivity and technical knowhow. Thus, many schemes to promote exports have been brought forward. Programs such as EOU and SEZ has made the entire thing duty free and further liberalized the international trade environment. Such moves have made the export industry an attractive business opportunity for many people.
It was introduced in the early 1980s. It still remains in the foremost of India’s export production schemes. The main objectives of this scheme are:
The scheme has greatly evolved over the last two decades. But the basic idea remains the same. According to this, exporters are given a wide range of support facilities to make the process of export smoother and more profitable for them. It is a very dynamic policy initiative and has increased our exports considerably. It has made many citizens want to become exporters themselves, as all the complications and difficulties from this field have been removed.
In spite of having given so much relief by the government, there are certain things that any exported will have to do, in order to give his or her business a set of wings. First of all, you don’t get EOU automatically. You need to obtain a special license. Fortunately, EOU is not centralized and can be set up anywhere and everywhere in India. An EOU may be indulging in the production and manufacturing of software’s, the floriculture and horticulture industry, the agriculture, animal husbandry, aquaculture, poultry farming, pisciculture, sericulture or any other activities falling in the same line. Setting up EOU can be quite a task as it cannot be done privately. Government has some really strict rules and regulations regarding it. It can only be done in the local zonal offices or the offices of state of state government.
The following are the benefits enjoyed by Export Oriented Units:
For being accorded the status of EOU, the project must have a minimum investment of Rs.1 crore in plant and machinery. This condition does not apply for software technology parts, electronics hardware technology parks and bio-technology parks. Further, EOU involved in handicrafts, agriculture, animal husbandry, information technology, services, brass hardware and handmade jewellery do not have any minimum investment criteria.
To obtain EOU status, application for setting up of unit under EOU scheme must be made to the Board of Approval. If approved, a validity of Letter of Permission for setting up EOU is provided. The Letter of Permission will have a initial validity of 2 years to enable the unit to construct the plant and install the machinery. Further extension can be obtained for a period of upto one year. On starting operation, in a period of 5 years, the EOU will have to achieve positive net foreign exchange earning cumulatively.
EOUs can be set up anywhere in the country and may be engaged in the manufacture and production of software, floriculture, horticulture, agriculture, aquaculture, animal husbandry, pisciculture, poultry and sericulture or other similar activities.
However, it should be noted that in case of large cities where the population is more than one million, such as Bangalore and Cochin, the proposed location should be at least 25 km away from the Standard Urban Area limits of that city unless, it is to be located in an area designated as an "industrial area" before the 25th July, 1991. Non-polluting EOUs such as electronics, computer software and printing are exempt from such restriction while choosing the area.
Apart from local zonal office and state government, setting up of an EOU is also strictly guided by the environmental rules and regulations. Therefore, an even if the EOU unit has fulfilled all locational policy but not suitable from environmental point of view then the Ministry of Environment, Government of India has right to cancel the proposal. In such situation industrialist would be required to abide by that decision.
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