Schemes Policies
- Special Economic Zones (SEZ) Scheme
- Electronics Hardware Technology Park (EHTP) Scheme
- Export Oriented Unit (EOU) Scheme
- Export Promotion Capital Goods (EPCG) Scheme
- Duty Exemption and Remission Schemes
- Deemed Exports
| Benefits | EHTP/STP/EOU Unit | SEZ Unit |
|---|---|---|
| Foreign Equity permissible | 100% FDI investment permitted through automatic route | 100% FDI investment permitted through automatic route |
| Duty free imports/ domestic procurement permissible | Capital goods, Raw materials, Components and other inputs | All goods for development, operation and maintenance |
| Income Tax Benefit | Export profits 100% tax-exempt under Sections 10A/10B of the Income Tax Act (upto 31st March 2011) | 100% Income Tax exemption on export profits under Section 10AA of the Income Tax Act for 5 years, 50% for next 5 years thereafter and 50% of ploughed back export profit for next 5 years |
| Export Obligation | Unit shall be a positive Net Foreign Exchange (NFE) Earner. Supplies of ITA-1 items manufactured by these units in the Domestic Tariff Area (DTA) shall be counted towards fulfillment of export obligation | Unit shall be a positive Net Foreign Exchange (NFE) Earner. Supplies of ITA-1 items manufactured by these units in the Domestic Tariff Area (DTA) shall be counted towards fulfillment of export obligation |
| DTA Sales | DTA sales permissible upto 50% of FOB value of exports, subject to fulfillment of positive NFE, on payment of concessional duties (50% of basic customs duty and full excise duty). DTA sales beyond this entitlement are permissible against payment of full duties provided the unit has achieved positive NFE. | DTA sales permissible on payment of full duties. However, the unit is required to be a positive Net Foreign Exchange (NFE) Earner over the five year period of its operation. |
| Central Sales Tax | Refundable | Exempted |
| Supplies from DTA | Deemed Export | Physical Export |
Special Economic Zones (SEZ) Scheme
As per the “Special Economic Zones Rules, 2006”, notified by the Department of Commerce, in case a SEZ is proposed to be set up exclusively for electronics hardware and software, including information technology enabled services, the area shall be ten hectares or more with a minimum built up processing area of one lakh square meters.
Electronics Hardware Technology Park (EHTP) Scheme/ Export Oriented Unit (EOU) Scheme
The details of EOU/EHTP schemes are available in Chapter-6 of India’s Foreign Trade Policy and Procedures on the website of the Department of Commerce, Ministry of Commerce & Industry (http://commerce.nic.in ). Details pertaining to SEZ scheme are also available on this website.
Export Promotion Capital Goods (EPCG) Scheme
The Zero duty EPCG Scheme is available to exporters of electronic products. It allows import of capital goods for pre-production, production and post-production (including CKD/SKD thereof as well as computer software systems) at zero% customs duty, subject to an export obligation equivalent to 6 times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 6 years reckoned from Authorization issue-date.
The concessional 3% duty EPCG Scheme allows import of capital goods for pre-production, production and post-production (including CKD/SKD thereof as well as computer software systems) at 3% customs duty, subject to an export obligation equivalent to 8 times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 8 years reckoned from Authorization issue-date.
The capital goods shall include spares (including refurbished/reconditioned spares), tools, jigs, fixtures, dies and moulds. Second hand capital goods, without any restriction on age, may also be imported under the EPCG Scheme. The export obligation can also be fulfilled by the supply of ITA-1 items to the DTA, provided the realization is in free foreign exchange.
The details of the EPCG scheme are available in Chapter-5 of India’s Foreign Trade Policy and Procedures on the website of the Department of Commerce, Ministry of Commerce & Industry (http://commerce.nic.in).
Duty Exemption and Remission Schemes
Duty exemption schemes enable duty free import of inputs required for export production. Duty exemption schemes consist of:
- Advance Authorisation scheme
- Duty Free Import Authorisation (DFIA) scheme
A Duty Remission Scheme enables post export replenishment / remission of duty on inputs
used in export product. Duty Remission Schemes consist of :
- Duty Entitlement Passbook (DEPB) Scheme
- Duty Drawback (DBK) Scheme
The details of these schemes are available in Chapter-4 of India’s Foreign Trade Policy and Procedures on the website of the Department of Commerce, Ministry of Commerce & Industry (http://commerce.nic.in).
Deemed Exports
"Deemed Exports" refer to those transactions in which the goods supplied do not leave the country, and the payment for such supplies is received either in Indian rupees or in free foreign exchange.
The following categories of supply of goods by the main/ sub-contractors are regarded as "Deemed Exports" under the Foreign Trade Policy, provided the goods are manufactured in India:
(a) Supply of goods against Advance Authorisation/Advance Authorisation for annual requirement/DFIA
(b) Supply of goods to Export Oriented Units (EOUs) / Software Technology Park (STP) units / Electronic Hardware Technology Park (EHTP) units / Bio Technology Park (BTP) units
(c) Supply of capital goods to Export Promotion Capital Goods (EPCG) Authorisation holders
(d) Supply of goods to projects financed by multilateral or bilateral Agencies/Funds as notified by the Department of Economic Affairs, Ministry of Finance under International Competitive Bidding (ICB) in accordance with the procedures of those Agencies/Funds, where the legal agreements provide for tender evaluation without including customs duty
(e) Supply of capital goods, including in unassembled/disassembled condition as well as plants, machinery, accessories, tools, dies and such goods which are used for installation purposes till the stage of commercial production, and spares to the extent of 10% of the FOR value to fertilizer plants
(f) Supply of goods to any project or purpose in respect of which the Ministry of Finance, by a notification, permits the import of such goods at zero customs duty
(g) Supply of goods to the power projects and refineries not covered in (f) above
(h) Supply of marine freight containers by 100% EOU (Domestic freight containers - manufacturers) provided the said containers are exported out of India within 6 months or such further period as permitted by the customs;
(i) Supply to projects funded by UN agencies
(j) Supply of goods to nuclear power projects through competitive bidding as opposed to ICB.
The benefits of deemed exports shall be available under paragraph (d), (e), (f) and (g) only if the supply is made under the procedure of ICB.
Benefits for Deemed Exports
Deemed exports shall be eligible for any/all of the following benefits in respect of manufacture and supply of goods qualifying as deemed exports subject to the terms and conditions as given in the Chapter-8 of Handbook of Procedures (Vol.I), 2009-2014 of the Department of Commerce, Ministry of Commerce & Industry:
(a) Advance Authorisation/Advance Authorisation for annual requirement/DFIA
(b) Deemed Export Drawback.
(c) Exemption from terminal excise duty where supplies are made against ICB. In other cases, refund of terminal excise duty will be given.
The details of “Deemed Exports” scheme are available in Chapter-8 of India’s Foreign Trade Policy and Procedures on the website of the Department of Commerce, Ministry of Commerce & Industry (http://commerce.nic.in).
