Starting an export company?

Question

I have an existing business. I want to diversify into exports. I do not know the procedure and the paper work. Is there any way out? Any one interested in joining hands and helping?

Answer 1

Hi, If you want to diversify your company into an Export Oriented Unit, you need to first look into the rules laid down by Directorate General of Foreign Trade and study FOREIGN TRADE (DEVELOPMENT AND REGULATION) ACT, 1992.

BENEFITS TO EOU(Expot Oriented Unit) UNITS

1.CUSTOM DUTY : No Custom duty payable on Capital Goods, consumables, raw material and spares which are mentioned in the Letter of Permission (LOP) of the EOU.

2.EXCISE DUTY : Goods mentioned in LOP can also be purchased from domestic market against CT3 form without payment of Excise duty.

3.SALES TAX : EOUs are eligible for  refund of Central Sales Tax that they may have paid on their inputs.

4.DTA SALES : EOUs can sell up to 50% of FOB value of previous year’s exports in domestic market, charging 50% of applicable Custom and Excise duties on the final product. The sale may be of main product or by products. As no custom and excise duties had been paid on inputs, this results in higher realization for EOU as compared to domestic producers.

5.EEFC account : EOUs can retain up to 100 % of their export earning in Foreign currency in their EEFC account. These can be used to clear import bills, issue foreign currency for foreign travel or make other official foreign remittances

6.INCOME TAX : Under Section 10 (B), EOUs are exempt from paying Income tax  on 90%  of the profit from export of goods made for 10 consecutive assessment years beginning with the year in which the EOU begins manufacturing. This exemption is valid till assessment year beginning 1/4/2010.

7.PROJECT FUNDING : The total funding of the project can be in Foreign currency, at low international interest rates. As the repayment would be from export income which is also in foreign currency, a natural hedge to exchange rate fluctuation is inbuilt in the system.

8.PC / PCFC :  Pre and post shipment credit at low interest rates is available from banks for executing export orders.

9.MONITORING CRITERIA : The only criteria for monitoring performance of EOU today is that it should be Net Foreign exchange earner i.e its NFE (net foreign exchange) should be positive. There are no other export obligations attached.

I am working with a 100 percent Export Oriented Unit for last 2 years in marketing division. Please let me know if you need some more information , my email ID is [e-mail]