Com Min eases rules for EoUs, software, hardware parks

It is aimed at promoting exports

The Commerce Ministry has relaxed certain norms like doing away with mandatory warehousing requirement for export-oriented units (EoUs) and software and electronic hardware technology parks.

The move is aimed at promoting out-bound shipments and manufactured products from EoUs, software technology parks of India (STPIs) and electronic hardware technology parks (EHTPs).

The Directorate General of Foreign Trade (DGFT) has also eased conditions for the existing EHTP and STP units to avail tax exemptions in the case of conversion or merger of EoU unit and vice versa.

In a notification, DGFT said an EoU which is into agriculture, aquaculture, horticulture and poultry may be permitted to remove specified goods in connection with its activities for use “outside the premises of the unit”. It was allowed only for outside the bonded area.

The DGFT has said this through a notification amending the foreign trade policy (2015-20). The EoU scheme, which was introduced in December 1980, had allowed manufacturing units in export processing zones to enjoy 100% tax exemption on profits from overseas sale and duty-free import of raw material.

As the scheme had a sunset clause, the tax benefits were stopped from March 2010. This scheme was utilised by SMEs for setting up their units for the purpose of exports. Later, a committee had suggested steps, including tax incentives, to revive these units. The scheme includes EoUs, EHTPs and STPs.

The decision takes on significance as the country’s exports after rising for the first time in 19 months in June shrank again in July. It contracted 6.84% due to decline in shipments of engineering goods and petroleum products.

In an interaction with DH, India Electronics and Semiconductor Association (IESA) president M N Vidyashankar welcomed the decision of the Commerce Ministry. “The industry is expecting the government to take proactive steps to  boost its exports. The IESA recently quantified the defence electronics requirement of India to be around $75 billion in the next 10 years,” he said.