Lok Sabha Question No. 2643 (UNSTARRED), answered on 2018-03-12
Subject: Export Oriented Units
Ministry: COMMERCE AND INDUSTRY
Asked by: KONDA VISHWESHWAR REDDY

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY (DEPARTMENT OF COMMERCE)

## LOK SABHA UNSTARRED QUESTION NO. 2643 TO BE ANSWERED ON 12 th  MARCH,2018

## EXPORT ORIENTED UNITS

## 2643. SHRI KONDA VISHWESHWAR REDDY:

Will the Minister of COMMERCE & INDUSTRY ( वािणÏय एवं उɮयोग मंत्री ) be pleased to state:

- (a) whether  the  number  of  Export  Oriented  Units  (EOUs)  have  reduced  over  the previous years and if so, the details thereof;
- (b) the details of steps taken by the Government to arrest the declining trend;
- (c) whether the Government had set up any Committee to study and give recommendations  for  revamping  EOUs  scheme  and  if  so,  the  details  of  key recommendations; and
- (d) the number and details of recommendations accepted by the Government along with reasons for not accepting the other recommendations?

## ANSWER

okf.kT; ,oa m|ksx ea=ky; esa jkT; ea=h ¼Jh lh- vkj- pkS/kjh½

THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE AND INDUSTRY (SHRI C. R. CHAUDHARY)

- (a) The  number  of  functional  Export  Oriented  units  have  reduced  over  the previous years. The details are mentioned below:
- (b) On the recommendations of Public Accounts Committee contained in their 82 nd Report  (16 th Lok  Sabha),  a  Committee  under  the  Development  Commissioner, KandlaSEZ  has  been  constituted  on  06.02.2018  to  identify  the  shortcomings  of EOU Scheme, conduct a comparative study of the benefits accrued to SEZ units and EOUs so as to find out the reasons for shifting of EOUs to SEZ sector and

| Year                  |   No. of functional units |
|-----------------------|---------------------------|
| 2013-14               |                      2371 |
| 2014-15               |                      2293 |
| 2015-16               |                      2269 |
| 2016-17               |                      2239 |
| 2017-18 (Provisional) |                      2197 |

suggest the remedial actions to be taken to arrest the declining number of EOUs and make EOU Scheme more attractive.

(c) A Review and Revamp Committee for EOU was set up under the chairmanship of Shri S. C. Panda,  the  then  Development  Commissioner,  Noida  SEZ  in  December  2010  to  review  and revamp the EOU Scheme with a mandate to suggest suitable steps to make the scheme more vibrant and attractive for investors, develop a synergy between EOU Scheme and SEZ Scheme and aligning the EOUs to make them more globally competitive. The Committee, in July 2011 submitted following 32 recommendations to revamp the EOU Scheme:

| S.No.   | Recommendation of Revamp Committee                                                        |
|---------|-------------------------------------------------------------------------------------------|
| 1.      | To extend Investment linked Income Tax benefit                                            |
| 2.      | To allow exemption from Customs & Central Excise duty to all goods & services             |
| 3.      | To exempt Service Tax on services consumed wholly within EOUs                             |
| 4.      | To exempt CST on goods supplied to EOUs                                                   |
| 5.      | To exempt State levies on the goods supplied to EOUs                                      |
| 6.      | To rationalize administrative mechanism for setting up EOU and for efficient coordination |
| 7.      | To rationalize power for approval of the proposals for setting up EOUs                    |
| 8.      | To dispense with the minimum investment criteria for setting up EOU                       |
| 9.      | To align validity of the period of the LOP issued to EOU                                  |
| 10.     | To align duration of goods and services in EOU with the term of LOP                       |
| 11      | To allow broad banding of operations and activities in the EOU                            |
| 12.     | To expand scope of reconditioning / repair under para 6.16 of FTP                         |
| 13.     | Allowing warehousing facilities outside EOU premises and jurisdiction of DC               |
| 14 I    | To define 'similar goods' for DTA sale by EOUs                                            |
| 14 II.  | To allow DTA sale by EOU on payment on full duty without any rider of NFE                 |
| 14 III  | To allow DTA sale of by products / waste & scrap within DTA entitlement                   |
| 14 IV   | To exclude wholly exempted goods from computation in DTA entitlement                      |
| 15      | To align deemed exports supplies for EOUs at par with SEZ unit & DTA supplier             |
| 16.     | To rationalize fixation/amendment of SION for EOU                                         |
| 17.     | To allow sharing of facilities among EOUs                                                 |
| 18. I   | To simplify job work procedure                                                            |
| 18. II  | To allow EOU to undertake job work for DTA purpose                                        |
| 18. III | To allow direct delivery of raw material to sub-contractor                                |
| 19. I   | To allow transfer of services from one to another EOU without payment of service tax      |
| 19. II  | To allow inter unit transfer (IUT) of inputs among the group companies                    |
| 19. III | To allow return of goods/services to unit, in case of rejection, without payment of duty  |
| 19 IV   | To lay down uniform procedures for Inter-Unit Transfer (IUT) of finished goods            |
| 20.     | To allow procurement of spares & components for after sales-service in DTA                |
| 21.     | To dispense with the Procurement Certificate and CT-3 prior to procurement of goods       |
| 22      | To reduce ceiling for self warehousing and self certification of goods by EOUs            |
| 23.     | To dispense with Cost Recovery charge for services of Customs &C.Ex. officers             |
| 24.     | To rationalize criteria for unblemished trade record                                      |
| 25.     | To allow transfer of goods for repair / replacement, testing or calibration               |
| 26.     | To rationalize report/return to be filed by EOUs                                          |
| 27.     | To extend time for submitting shipping bill for export under self sealing/ certification  |
| 28.     | To allow credit facility against EEFC balances                                            |
| 29.     | To allow retention of 100% export earning in EEFC account                                 |
| 30.     | Power & functions of BOA and UAC under the IDR Act and FTDR Act                           |
| 31.     | To empower BOA as policy relaxation and Grievance redressal body for EOUs                 |
| 32. I   | Increase duty free procurement of spares to 15% from 5% for EOUs in granite sector        |
| 32. II  | To allow removal of duty free spares to granite quarry site                               |

(d) After Inter-Ministerial consultation, the following 8 recommendations were accepted in January 2014 and were implemented in FTP 2015-20:

- i. To align the validity of the period of Letter of Permission (LOP) issued to EOU.
- ii. To alignduration of goods and services in EOU with the term of LOP.
- iii. Setting up of warehousing facilities outside EOU premises and outside the jurisdiction of DC was allowed.
- iv. Sharing of facilities among EOU/STP/EHTP/SEZ Unit was allowed.
- v. Inter-Unit transfer (IUT) of goods & services were allowed.
- vi. Self-warehousing  and  self-certification  of  goods  imported/procured  by EOUs.
- vii. Rationalization of reports/ returns to be filed by EOUs.
- viii. Extension of time for submitting shipping bill for export made under selfsealing / self-certification.

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