6.10

Net Foreign Exchange (NFE) Earnings

(a) EOU / EHTP / STP / BTP unit shall be a positive net foreign exchange earner. NFE earnings shall be calculated cumulatively in the block period as per Paragraph 6.04 of FTP, according to the formula given below. Items of manufacture for export specified in LoP / LoI alone shall be taken into account for calculation of NFE.

Positive NFE = A - B> 0

Where

'NFE' is Net Foreign Exchange;

'A' is FOB value of exports by EOU / EHTP / STP / BTP unit;

'B' is sum total of CIF value of all imported inputs and CIF value of all imported capital goods, and value of all payments made in foreign exchange by way of commission, royalty, fees, dividends, interest on external borrowings / high sea sales during first five year period or any other charges. It will also include payment made in Indian Rupees on high sea sales.

"Inputs" mean raw materials, intermediates, components, consumables, parts and packing materials.

(b) If any goods are obtained from another EOU / EHTP / STP / BTP /SEZ unit, or procured from an international exhibition held in India, or bonded warehouses or precious metals procured from nominated agencies, value of such goods shall be included under 'B'.

(c) If any capital goods are imported duty free or leased from a leasing company, received free of cost and / or on loan basis or transfer, CIF value of capital goods shall be included pro-rata, under 'B' for period it remains with units.

(d) For annual calculation of NFE, value of imported capital goods and lump sum payment of foreign technical know- how fee shall be amortized as under:

1st - 10th year : 10%.

Provided that above amortization rates would be applicable only if an undertaking is given by a unit that it will not exit to DTA in the first 10 years. For existing units, proportionate Customs and excise duty must be paid where NFE is less than depreciation already claimed, before exit.