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Policy & Procedure

Unit undertaking to export their entire production of goods and services (except permissible sales in the DTA), may be set up under 100% Export Oriented Software Technology Park (STP) and Electronic Hardware Technology Park (EHTP) Scheme for manufacture of goods, including repair, re-making, reconditioning, re-engineering and rendering of services, except items that are prohibited in the ITC (HS).

No minimum project investment condition applicable on STP/EHTP units.

LoP/LoA issued to the STP/EHTP units is construed as a license for all-purpose.

The LoP/LoA have an initial validity of 3-years by which time the unit should have commenced the production. Once the unit commences production, LoP/LoA issued is valid for a period of 5-years for its activities. This period may be extended further for a period of 5-years at a time.

Failure to ensure positive NFE or to abide by any of the terms and conditions of LOP/LOA/LUT shall render the unit liable to penal action under the provisions of the Foreign Trade (Development & Regulation) Act, 1992 and the Rules and Orders made thereunder without prejudice to action under any other law/rules and cancellation or revocation of LOP/LOA.

The STP/EHTP unit can exit from the scheme subject fulfillment of Export Performance (EP), Net Foreign Exchange Earning (NFE) and Export Obligation norms in respect of LOP/LOA issued as per EXIM Policy. For any cancellation, service charges will not be refunded. Cancellation of STP registration will be subject to the EXIM Policy.

Statutory Compliance for STP Units
Important statutory compliance for STP/EHTP units are listed below as reference.

Accounts :
Distinct Identity :
If any company is operating both as STP/EHTP unit as well as Domestic unit, it shall have two distinct identity with separate accounts, including separate bank accounts. Each of such unit is required to maintain separate accounts for its operations. Separate annual balance sheet will have to be made for each such unit which would be become a part of the main balance sheet of the company.

For maintaining separate accounts the following will have to be done :

  • Maintenance of separate record of the sales invoices.
  • Maintenance of separate Fixed Assets Register.
  • Maintenance of Foreign Inward Remittance Certificate file (FIRC's) & Bank Realization Certificate file where the original of the FIRC's and BRCs are kept.
  • Maintenance of contract file, where copies of contracts received from buyers are maintained.
  • Preparation of yearly balance sheet for the unit, which would ultimately become a part of the balance sheet of the company.

Banking :
Each unit is required to maintain separate bank accounts for its operations. The units is free to have as many bank accounts as it desires but shall have to designate a single branch of bank whom all export documents will be submitted. In other words the work of handling of all shipping documents and realization of export proceeds will have to be entrusted to this designated bank branch.

Statutory Reports

  • Monthly Progress Reports (MPRs)
    STP units are required to submit Monthly Progress Reports in prescribed format by 1st of the following month to STPI.
  • Quartely Progress Reports (QPRs)
    STP/EHTP units are required to submit Monthly Progress Reports in prescribed format, before 10th of the month after the close of the quarter to STPI.
  • Annual Report Progress (APRs)
    All the STP/EHTP units are required to submit Chartered Certified Annual Progress Reports in the prescribed format, before the end of 1st quarter of the following year to STPI.

Timely Submission of monthly, quarterly and annual report by the units are mandatory requirements. Units that are irregular in submitting MPRs & QPRs can be denied services of STPI.

Statutory Obligation & Records

  • Imported Capital Goods Records :
    A copy of the import certificate issued by STPI and the other relevant documents like procurement certificate, bill of Entry etc. should be maintained separately. This should have the full details etc. as per the actual imports.
  • Indigenously Procured Capital goods Records :
    A copy of the indigenous procurement certificate issued by STPI and the other relevant documents like procurement certificateCT-3 form, etc. should be maintained separately. This should have the full details etc. as per the actual procurements.
  • Export Documents :
    Contracts/Agreements/work orders from the buyers alongwith the certified export forms by STPI should be maintained.
  • Performance Reports File :
    Monthly, Quarterly and Annual performance reports of the unit, given to STPI should be maintained separately.

Commencement of Operation

Date of commencement of operation should be intimated to STPI for record. The units has to commence its commercial production within the stipulated time frame in accordance with the Letter of Permission and EXIM Policy in force. Exports made prior to confirmed date of operation will not be considered towards the Export Performance / Export Obligation of the unit under the scheme for any benefits/relaxations.

Minimum Export Obligation

As per the Foreign Trade Policy, 2009-2014, 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 date of commencement production, according to the formula as under :

Positive NFE= A-B >0

A : FOB value of exports

B : Sum total of CG Imported + Value of payments made in Foreign Exchange

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