What Is EOU?

An EOU is a business unit that has been approved to produce or provide services mainly for export. The scheme sits in Chapter 6 of the Foreign Trade Policy, whose title covers EOUs, Electronics Hardware Technology Parks, Software Technology Parks and Bio-Technology Parks. Such units operate under a customs and policy framework meant for exporters, and the details are set by the policy and the Handbook of Procedures. An EOU differs from an SEZ unit because an EOU is approved under the Foreign Trade Policy, while an SEZ is a zone notified under its own Act. Check the current policy text for conditions and benefits.

For example, a software firm in Bengaluru gets approval as a Software Technology Park unit to serve overseas clients. It follows the conditions of the scheme and receives its foreign payments through an AD bank.

• Policy framework: EOU status places the unit under Chapter 6 of the Foreign Trade Policy. The benefits and obligations come from that chapter and the Handbook of Procedures, so read the current versions.
• GST: The GST treatment of supplies by and to an EOU follows GST law. Check with your tax adviser or the GST portal, and see zero-rated supply.
• Income tax: Tax benefits linked to EOU status depend on the law in force for each year. Ask your chartered accountant, as the Income-tax Act, 2025 now applies.
• Bank compliance: EOUs receive export proceeds through AD banks and follow FEMA reporting. See SEZ and EOU payment rules and export realisation.

An EOU works by approving a unit to export under the Foreign Trade Policy and monitoring it against its commitments.

1. The business applies for approval under the relevant Chapter 6 scheme.
2. The competent authority reviews the application and grants approval.
3. The unit operates under the policy and customs conditions of the scheme.
4. The unit exports and receives payments through its AD bank.
5. The unit submits the reports and returns that the scheme requires.
6. The authorities monitor performance against the commitments.

You apply under the EOU scheme of the Foreign Trade Policy, following the procedure in the Handbook of Procedures. The DGFT policy page lists Chapter 6, and the current process and forms should be read from the Handbook.

1. Get an IEC, as explained in IEC code.
2. Read Chapter 6 of the Foreign Trade Policy for the scheme that fits your activity.
3. Read the matching part of the Handbook of Procedures for the application steps.
4. Prepare the project details and documents the process asks for.
5. Apply through the channel DGFT or the approving authority specifies.
6. Plan your AD bank arrangement for export receipts.

• Same as SEZ: An SEZ is a notified zone under the SEZ Act, 2005. An EOU is an approved unit under the Foreign Trade Policy.
• Only manufacturing: Chapter 6 also covers Software Technology Parks and other parks, so service and technology units are covered.
• Free from FEMA: EOUs follow FEMA for foreign receipts and use AD banks like other exporters.
• Permanent status: Approval comes with conditions and monitoring, so status depends on meeting them.

• SEZ: A zone notified under the Special Economic Zones Act, 2005.
• RoDTEP: A remission scheme for exported goods.
• Duty drawback: A refund of customs duty on inputs used in exports.
• DGFT: The authority that runs the Foreign Trade Policy.
• IEC: The code needed for import and export business.

Every rule and definition on this page is linked to its official source, checked on the dates below.

1. Foreign Trade Policy chapters, DGFT, Chapter 6 title covering EOUs, EHTPs, STPs and BTPs (checked 9 Oct 2026)