SETTING UP OF A EOU

[Ramaswamy S]

A manufacturer supplying his entire production to 100 % EOU/EHTP. Can such manufacturer convert the unit into an EOU and reap the export benefit as per Chapter 6 of FTP. Or is it mandatory that the unit to have at least 50% physical exports to convert into a EOU.

Thanks .

Regards,

S.Ramaswamy

AI Summary

Manufacturer Seeks Export Benefits: Can a Domestic Unit Convert to EOU Without Physical Exports? NFE Now Key Requirement. A manufacturer inquires whether a unit supplying its entire production to a 100% Export Oriented Unit (EOU) can convert into an EOU to gain export benefits, despite not having physical exports. The initial response highlights that the 50% physical export condition has been removed, with Net Foreign Exchange (NFE) now being the requirement. The discussion further clarifies that a unit can convert to an EOU even if it only engages in deemed exports, such as inter-unit transfers. Additionally, if a unit transitions from a Domestic Tariff Area (DTA) to an EOU, it may remove capital goods without duty under certain conditions.