EOU (Export Oriented Unit) is a business unit in India that is set up mainly to produce goods or provide services for export. EOUs can operate in manufacturing, services, software, and other sectors, subject to the applicable rules and approvals.
The EOU scheme offers eligible units certain customs and trade benefits to support exports. In return, the unit must follow the conditions of the scheme, including meeting applicable export obligations and maintaining the required records and compliance.
How It Works:
- Business applies for EOU status.
- The unit receives the required approval.
- Eligible inputs and equipment are sourced.
- Goods or services are produced for export.
- The unit meets applicable export requirements.
Benefits:
- Supports export-focused businesses
- Provides eligible customs benefits
- Can reduce the cost of inputs and equipment
- Encourages international trade
Example:
An Indian company sets up a unit to manufacture electronic components mainly for overseas buyers. After obtaining EOU approval, it can use the benefits available under the EOU scheme while meeting the required export conditions.