6.5

Net foreign exchange earning as a percentage of exports (NFEP) under EOU/EPZ/ EHTP/STP schemes, as provided in paragraph 6.5 of the Policy, shall be calculated according to the following formula:

A-B

NFEP= --------- x 100,

A

Where

NFEP is Net Foreign Exchange Earning as a Percentage of Export

is the FOB value of exports by the EOU/EPZ/EHTP/STP unit; and

B is the sum total of the CIF value of all imported inputs, the CIF value of all imported capital goods, and the value of all payments made in foreign exchange by way of commission, royalty, fees, dividends, interest on external borrowings during the first five year period or any other charges. "Inputs" mean raw materials, intermediates, components, consumables, parts and packing materials

NOTE:

(i) If any goods are obtained from another EOU/EPZ/EHTP/STP unit, or procured from an international exhibitions held in India and precious metals procured from nominated agencies, the value of such goods shall be included under B.

(Note No. (i) has been corrected vide PN No. 16/2002, Dt. 05/06/2002)

(ii) If any capital goods imported duty free is leased from a leasing company, received free of cost and/or on loan basis or transfer, the CIF value of the capital goods shall be included or excluded, as the case may be, pro-rata, under B for the period it remains under bond

(iii) For annual calculation of net foreign exchange as a percentage of exports, imported capital goods and lumpsum payment of foreign technical know-how fee shall be included under B above as under:

Units with actual investment in plant and machinery of Rs.5 crores and above.	Others
1st –2nd year : 5% each year	1st-2nd Year : 10%
3rd-5th year : 10% each year	3rd Year : 20%
6th-8th year : 20% each year	4th year : 30% 5th Year : 30%

The minimum NFEP and EP are indicated in Appendix 1 of the Policy. In case of existing units the earlier NFEP and EP may be repeated at the time of renewal. However, NFEP and EP of such units will be revised, as per Policy, at the time of renewal of the approval or mid-term revision by the Development Commissioner, if such proposal envisages addition of installed capacity.

Appendix I of the Policy only indicates the minimum level to be achieved, but does not preclude the Board of Approvals (BOA) or the Development Commissioner from prescribing a higher percentage where warranted.