The EOU scheme was introduced in the year 1980 vide Ministry of Commerce resolution dated 31 st December 1980. The purpose of the scheme was basically to boost exports by creating additional production capacity.

The EOU scheme is, at present, governed by the provisions of Export and Import Policy of Govt. Of India. These units may be engaged in the manufacture, services, development of software, repair, remaking, reconditioning, re-engineering including making of gold/silver/platinum Jewellery and articles thereof, agriculture including agro-processing, aquaculture, animal husbandry, bio-technology, floriculture, horticulture, pisiculture, viticulture, poultry, sericulture and granites. The EOUs can export all products except prohibited items of exports in ITC (HS).

Scheme Benefits & Highlights:

• All the imports to units are customs duty free.
• Exemption from GST for the procurement of Capital Goods and Raw Materials from domestic market.
• Units are entitled to sell the product in local market upto 50% of the products exported in value terms.
• Full Freedom for sub-contracting.
• They have to achieve positive NFE (Net Foreign Exchange Earnings).
• Minimum investment in plant and machinery and building is Rs.100 lakhs for EOU. This should be before commencement of commercial production.
• Generally, all final production should be exported, except rejects upto prescribed limit.
• Samples can be sold / given free within prescribed limit.
• Unutilized raw material can be disposed of on payment of applicable duties.
• The unit can exit (de-bond) with permission of Development Commissioner, on payment of applicable duties.
• Prescribed percentage of foreign exchange earnings can be retained in EEFC account in foreign exchange.
• No restrictions on External Commercial Borrowings.