The Hindu Business Line : EOUs allowed to send partially processed goods outside India

New Delhi, April 15 In a significant procedural simplification for 100 per cent export oriented units (EOUs), the Finance Ministry has allowed such units to take out of India partially-processed goods, process them on sub-contract basis outside the country and even sell them there without bringing the finished goods back.

This move has come months after the Director-General of Foreign Trade made necessary changes to the export-import procedures to facilitate such movement of partially processed goods from EOUs, according to Mr L.B. Singhal, Director-General of the export promotion council, for 100 per cent EOUs and SEZs.

“The Finance Ministry’s move will help EOUs,” he said. Mr Singhal pointed out that international buyers often insist that EOUs should supply semi-processed goods, which could then be processed and packaged finally at their place according to the requirement of their own market. Till date, semi-processed goods were not allowed to be exported from EOUs.

The Finance Ministry has also now enabled export of spares and components of 5 per cent of Free on Board (f.o.b.) value along with capital goods and machineries. This is allowed even if the spares are not manufactured by EOUs. Hitherto, EOUs were not allowed to undertake trading activities. Now, they can buy spares up to 5 per cent of f.o.b. and export it along with main machineries for after sales services.

Currently, 100 per cent EOUs in the country provide direct employment to 11.84 lakh persons. In fiscal 2007-08, exports by EOUs crossed Rs 1,25,000 crore, which is 81 per cent higher than the exports of Rs 69,000 crore recorded by such units in 2006-07.

Govt encouragement

The Government had recently initiated a spate of measures to encourage EOUs. The Commerce and Industry Minister, Mr Kamal Nath, had in the recent annual supplement to the Foreign Trade Policy announced that the income tax benefits for EOUs under Section 10B would be extended for one more year beyond 2009.

Also, EOUs are now allowed to pay excise duty on a monthly basis, instead of the present system of paying duty on consignment basis. Further, EOUs operating in textile and granite sector would be required to pay only excise duty on their domestic tariff area sale.

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