electronic hardware technology park

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ELECTRONIC HARDWARE TECHNOLOGY PARK

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Page 1: Electronic  hardware technology  park

ELECTRONIC HARDWARE TECHNOLOGY PARK

Page 2: Electronic  hardware technology  park

INTRODUCTION

The EHTP Scheme is a 100% Export Oriented Scheme for undertaking manufacturing of electronic hardware equipment/components and other items. in India. This scheme is unique in its nature as it focuses on one product/sector, i.e. Electronic Hardware.

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An EHTP unit is also allowed to manufacture items other than those specified in the approval letter, provided that such other items fall in the category of Electronic Hardware, the design and production facilities are common and have similar manufacturing process.

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SCHEME BENEFITS & HIGHLIGHTS The Central Government, State Government,

Public or Private sector undertakings or any combination thereof may set up the Electronic Hardware Technology Park (EHTP).

A company may set up STP unit anywhere in India.

Foreign equity permissible upto 100%.

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100% foreign equity investment in the companies permissible under the 'Automatic Route' of RBI.

Approvals are given under single window clearance. Project costing less than Rs. 100 million investment

are cleared by local STPI Authorities. Income Tax holiday as per IT Act of Ministry of

Finance, Govt. of India applicable time-to-time. EHTP units are exempted from payment

of corporate Income Tax.

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Capital invested by Foreign Entrepreneurs, Know-How Fees, Royalty, Dividend etc., can be freely repatriated after payment of Income Taxes due on them, if any.

EHTP unit is a duty free bonded area under section 65 of the Customs Act, 1962.

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100% Customs Duty exemption on imports of Capital Goods and inputs (Raw Materials, Components, Consumables, Parts and packing Materials)100% Excise Duty exemption on indigenous items procurement.

Import of Capital Goods on outright purchase, loan, free of cost and lease basis is permitted.

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Import of second hand capital goods is permitted. (except prohibited items).

Re-Export of capital goods is permitted Central Sales Tax reimbursement on

indigenous items procurement. Green card enabling priority treatment for

government clearances / other services.

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Sales in the DTA (Domestic Tariff Area) up to 50% of the foreign exchange earned by the EHTP unit.

Inter Unit Transfer between EOU/STP/EHTP/EPZ is permitted.

Sub-contracting between EOU/STP/EHTP/EPZ is permitted.

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Simplified Net Foreign Exchange Earnings (NFEP) & Export Performance (EP) norms, as applicable at the time of signing EHTP agreement.

Simplified depreciation norms on Capital Good.

Single Window Clearance Services Registration under EHTP Scheme

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Approvals for duty free Imports including Second Hand Capital Goods

Approval for Excise Duty exemption for procurement of Indigenous Capital Goods

Green Card issuance Attestation of Software Export Declarations Re-export of Capital goods imported on loan

basis as well as Repair/Replacement

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Shift / Inter Unit Transfer of capital goods Permission for Capital Structure Refinement

and ProPermission for Change of Company Name and Location.

ject Expansion.

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Reimbursement of the CST paid on Domestic Purchases

Approval for Sub-contracting DTA sales permission De-bond of equipments Letter of Permission Renewal Exit from scheme as per policy provision.

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BENEFITS UNDER EHTP SCHEME

An EHTP may import free of duty capital goods, raw materials, components and other related inputs. However these should not be on the negative list of prohibited items in the Foriegn Trade Policy. Second hand capital goods may also be imported by EHTP units.

An EHTP unit may bunch the products manufactured by it for sale in the DTA with its entitlement. EHTPs are duty free and bonded areas and customs exemptions are extended accordingly.

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An EHTP is exempted from the payment of corporate income tax up to 2010 and also central sales tax reimbursement..

Supplies that are effected in DTAs under global tender conditions and payment in forex are also considered as part of relinquishment of export obligation.\

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Supplies made by DTAs to an EHTP unit will be regarded as deemed exports and is entitled to benefits under the Foriegn Trade Policy. To get this benefit, goods have to be produced in the country and the supplies have to be made against a letter of authority issued by an officer designated in this behalf of the STPI, Government of India.

An EHTP unit may be setup for both software and hardware in an integrated manner

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EHTP unit may purchase indigenous goods free of excise duty

EHTP unit may sell Goods/Services in DTA up to 50% of FOB value of exports, subject to fulfillment of positive NFE as per the policy & payment of applicable duties.

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Minimum Export Obligation As per the Import-Export Policy, 2002-2007, EOU/EHTP/STP Unit shall be a net foreign exchange earner. Net Foreign Exchange (NFE) earning shall be calculated cumulatively for a period of five years from the commencement of production, according to the formula as under: Positive NFE= A-B >0 A: FOB value of exports B: Sum total of Capital Goods imported + value of payments made in foreign exchange.

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CRITERIA FOR AUTOMATIC APPROVAL

The following will be the criteria for securing automatic approval from the Director, EHTPI within whose jurisdiction the unit is proposed to be set up.

The Directors of EHTPI have been vested with powers to approve projects irrespective of the value of import of Capital Goods;

The Units meets the requirements of the Customs Authorities in so far as:

It is amenable to bonding by the Customs;

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All the manufacturing operations are carried out in the same premises and the proposal does not envisage sending out of the bonded area any raw material or intermediate products for any other manufacturing or processing activity;

However, the unit may be permitted to sub-contract part of their production process through job work by units in Domestic Tariff Area of other EHTP Units including subcontracting abroad on fulfillment of prescribed conditions.

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REGISTRATION PROCEDURE

Applications for securing both types of approvals is to be submitted to the Director, EHTPI within whose jurisdiction the unit is proposed to be situated (see page 11 of Form 15-F-01).

An application for setting up a EHTP unit is received in the prescribed format no. 15-F-01 from the potential software exporter.

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Application should be duly filled in with signatures and rubber stamp on the each page of the application.

A demand draft in favour of EHTPI within whose jurisdiction the unit falls for Rs.2,500/- on account of Application Fee.

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Project Report covering details containing the following details should be filed with the application in form 15-F-01. Company profile

Promoters background Units Area of Expertise / Services offered Marketing Strategy / Marketing Arrangements Manpower plan

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Future plans Financials statement like : Cost of project & Means of finance Projected P&L A/c. Projected Balance Sheet Projected Cash flow / fund flow statement Export workings - (As per Transfer pricing

guidelines where ever applicable)

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Memorandum & Articles of Association (in case the applicant is a company) and check whether the “Computer Software/IT enabled services” is one of the objects in the Main Object para of the Memorandum of Association.

Partnership Deed (in case of Partnership Firm)

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The Director acknowledges the receipt of the application and a reference number is given to each application.

The applicant is thereafter called to give a presentation on the project that he proposes to undertake with complete profile of the promoters, field of software development, marketing arrangement, business plan etc. in the EHTPI office.

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On approval of the project by the Director, letter of permission (in format No. 15-F-02) is issued to the units. The unit is thereafter considered registered under the EHTP Scheme.

On issuance of letter of permission, the EHTP unit have to undertake the following: 

Execution of legal agreementCustom bonding

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EXECUTION OF LEGAL AGREEMENT Letter of Permission (LOP) issued by the EHTPI would be

construed as a license for all purposes under the scheme including procurement of raw materials and consumables. The LOP shall specify the items of manufacture, limit of imported capital goods, projected export turnover in 5 years, location of EHTP unit, validity period, Net Foreign Exchange earnings as a percentage of exports (NFEP), limitation regarding sale of finished goods and rejects in the Domestic Tariff Area (DTA) and such other matters as may be necessary and also impose such conditions as may be required. The unit is required to send a letter to the Director, EHTPI confirming the acceptance of the terms and conditions as laid down in the LOP.

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Thereafter, the unit shall execute a Legal Undertaking as per format in Appendix-IX, with the Director, EHTPI concerned.

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PROCEDURE

The Legal Undertaking is to be executed on a stamp paper of Rs.50/- procured from the civil court under which the concerned EHTPI centre falls.

Each page of the Legal Undertaking is required to be signed and stamped by a person duly authorised in this behalf along with the Common Seal of the Company.

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A copy of the Board resolution authorizing the person to act as signatory on its behalf is also required to be enclosed.

The Legal Undertaking after acceptance is signed by the authorised signatory of EHTPI and the original is retained. A photocopy of the same is returned to the unit for record purposes.

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Copy of the Legal Undertaking is to be given to the Customs by the unit at the time of Customs Bonding of the premises.

A unit is required to pay 3-year advance service charges at the time of signing of the legal agreement on the basis of the projections made by it in the application, subject to a minimum of Rs. 50,000/- as per the following norms:

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Export Projection Service Charges

Exports upto Rs. 50 lacs per annum Rs. 15,000 per annnum

Exports more than Rs. 50 lacs per annum but upto Rs. 300 lacs

Rs. 50,000 per annnum

Exports above Rs. 300 lacs per annum

Rs. 1,00,000 per annnum

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In case of failure to fulfill the obligation stipulated in the Letter of Permission, the SPT unit would be liable to penalty in terms of the Legal Undertaking or any other law for the time being in force. The unit will also be liable for the following:

• payment of custom and excise duty on- Plant, machinery, equipment, raw material, components and consumables.

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Penalty under Foreign Trade (D&R) 1922 and Rules made thereunder

Permission under Foreign Trade (Development & Regulation) Act, 1992, and the Exim Policy is required to be taken by the unit before the products developed for exports are disposed off in the local market

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CUSTOM BONDING

EHTP units are compulsorily required to carry out their operations in a Custom bonded area whether it avails the benefits of Customs Duty/Excise Duty exemption or not. Vide Notification No. 33/94-Cus.(NT) dated 1.7.1994, the power to declare an area as a Custom bonded area has been delegated to the Commissioner of Customs within their respective jurisdictions.

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To get the premises Custom Bonded, the units are required to complete the following formalities:

Private Bonded Warehouse License from the Customs.

Single all purpose bond (B-17).

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A EHTP unit is required to submit the following documents to get the premises bonded:

Three copies of Floor Plan. Three copies of tentative list of Capital Goods

(along with their value) proposed to be imported and indigenous goods to be procured for the project.

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The Director attests the floor plan and the list of Capital Goods. Two copies of the floor plan and one copy of tentative list of capital goods are forwarded to the Jurisdictional Assistant Collector of Customs in the prescribed form and will issue a License called “Private Bonded Warehouse License” indicating its period of validity and CIF value of duty free equipment which can be kept within the same. This custom bonding is valid for 5 years. 

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The unit is required to submit the following documents to the Customs authorities:

Copy of letter of approval issued by the Director, EHTPI.

Memorandum and Articles of Association and Certificate from the Registrar of Companies for its incorporation or partnership deed

Floor plan duly approved by EHTPI. Copy of Purchase/Lease deed of

building/premises.

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Copy of Legal Agreement executed with EHTPI.

List of goods proposed to be imported attested by EHTPI.

Copy of IEC code. Copy of Green card issued by EHTPI. List of Directors of the Company. B-17 Bond.

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SINGLE ALL PURPOSE BOND(B-17) The EHTP unit is required to execute a single bond (B-17)

as per format given in Appendix-II before the Assistant Commissioner of Customs in whose jurisdiction the unit is situated. The Bond amount has to be equivalent to 25% of the duty leviable on the sanctioned requirement of imported and indigenous capital goods plus duty forgone on the raw materials to be held in stock for 3 months. The Assistant Commissioner of Customs before whom the above bond is executed would issue a certificate stating that the unit has executed the bond. On the strength of this certificate the goods will be allowed clearance under the exemption notification.