You are here: Home » Economy & Policy » News
Business Standard

Further extend EOU scheme in Budget: EPCES to govt

Seeks 5-yr extension to give boost to mfg sector

Press Trust of India  |  New Delhi 

Industry body EPCES today asked the government to extend the tax benefits offered under the Export-Oriented Unit (EOU) scheme for another five years in the forthcoming Budget to give a boost to the manufacturing sector.

Under the Export-Oriented Unit (EOU) scheme that was introduced in 1980, firms enjoy tax exemptions on profits under Section 10B of the Income Tax Act. This benefit was extended by one year, till March, 2011, in the previous Budget.

The scheme has contributed immensely to the creation of manufacturing capabilities in the country over the last 30 years, increasing exports and generating employment, the Export Promotion Council for SEZs and EOUs (EPCES) said in a statement here.

"The EOU scheme needs further extension of the sunset clause under section 10B of Income Tax Act in the forthcoming Budget 2011-12 and needs to be nurtured," EPCES Deputy Director General O P Kapoor said, adding that exports from EOUs stood at Rs 83,700 crore in 2009-10.

The sector has provided employment to 3,00,830 persons and investments worth Rs 77,284 crore have been made by EOUs, he said.

"EOU scheme needs to be nurtured further for encouraging creation of further dedicated manufacturing activities for exports," he said, adding, "The sunset clause should be further extended for a period of five years."

The 100 per cent EOU scheme allows only manufacturing activities and no trading activities are permitted.

Kapoor also said EOUs should be exempted from payment of service tax, VAT and CST, instead of the present practice of giving a refund, as it would reduce procedural work.

In another statement, a small and medium enterprises (SMEs) web portal, IndiaMART.Com, has asked the government to simplify the taxation process to encourage growth of the sector.

"We would suggest simplification of taxation for SMEs. Currently, there are multiple taxes and complex filing processes, which limit SME growth," IndiaMART.Com CEO Dinesh Agarwal said.

Agarwal said the Budget should increase fund allocation to the SME sector, which contributes 45% of India's manufacturing output and 40% of total exports. The sector employs over 60 million people.

"There is also a need for more collateral free financing," he added.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, February 22 2011. 14:45 IST