Govt eases norms for hardware technology parks
The Dollar Business Bureau
The government has done away with mandatory warehousing requirements for export-oriented units (EoUs) and software and electronic hardware technology parks to encourage exports and manufacturing from EoUs, electronic hardware technology parks (EHTPs) and software technology parks of India (STPIs).
In addition, the Directorate General of Foreign Trade (DGFT) has also eased existing conditions for the EHTP and STP units. They can now avail tax exemptions in cases of conversion or merger of EoU units and vice versa.
An EoU which is into agriculture, aquaculture, horticulture and poultry may be permitted to remove specified goods in connection with its activities for use “outside the premises of the unit”, DGFT said in a notification.
The EoU scheme was first introduced in December 1980. The scheme had allowed manufacturing companies in export processing zones to leverage 100% tax exemption on profits earned from their overseas sales and duty-free imports of raw material.
Since the scheme consisted of a sunset clause, the government had stopped giving tax benefits from March 2010. The scheme was used by SMEs for setting up their export-oriented units.
A committee had, in the past, suggested various steps, such as tax incentives, to strengthen these units. The schemes included EHTPs, EoUs and STPs.
The decision comes in the backdrop of India’s declining exports which contracted again in June after rising for the first time in June after 19 months. The July exports contracted 6.84% due to a decline of engineering goods and petroleum product exports.