The Export-Oriented
Units (EOUs) scheme was intro-
duced by the Ministry of Commerce on December 31,
1980. The purpose of the scheme was basically to boost exports by
creating additional production capacity. It was introduced as a
complementary scheme to the free trade zone/export processing
zone scheme introduced in the 1960s, which had not attracted many
units due to geographical restrictions. The exporters expressed
willingness to set up units with long-term commitment to exports under
customs bond operations, provided they had the freedom to locate
them in places of their choice.
Interestingly, until the early 1970s, units exporting 20%
or more of their production were given preferential treatment
for the import of capital goods, while those exporting 60% or more
were entitled to a more liberal treatment for the import of capital
goods. But then, some of these units exported their entire production,
but were not entitled to incentives given to similar units in the
Export Processing Zones (EPZs), as they were located outside
the EPZs. In order to eliminate this anomaly, a proposal
suggesting that these units should also be extended facilities, analogous
to those admissible to units in the EPZs, was mooted in 1977.
However, as the New Industrial Policy was then in the process of
formulation, it was decided that they would be assisted in
accordance with the guidelines in the industrial policy statement. The
industrial policy statement issued subsequently envisaged
exemption from customs/central excise duty on inputs for wholly
export-based activities, provided these resulted in substantial net added value
in the export production and generation of additional direct and
indirect employment. The earlier proposal for parity with EPZ units
in incentives and facilities for 100% EOUs was accordingly revived
in the light of the guidelines contained in the policy statement. It was
finally approved as the EOU scheme in 1980. Basically, this scheme
facilitates the setting-up of EOUs beyond the boundaries of the
EPZs. Operational guidelines for these units were spelt out in the
policy resolution of 1980. A board of approvals was constituted for
clearing the project proposals, reviewing the progress and
considering the policy issues. Other terms and conditions governing their
operations, including the method of computing value-addition, were
also detailed in the resolution. |
