No. 4/91-SSI Bd. & Policy

MINISTRY OF INDUSTRY
OFFICE OF THE DEVELOPMENT COMMISSIONER
SMALL SCALE INDUSTRIES
NIRMAN BHAVAN, NEW DELHI
Dated 10.11.1993

To,

  1. Secretary (Industries),All States/UTs.
  2. Director (Industries),All States/UTs.
  3. The Director,all SISIs.
  4. Others as per mailing list.

SUBJECT: - Monitoring of export obligation of registered small scale export-oriented units.

REFERENCE: -

  1. Circular No. 5(1)/87-SSI Bd. dt. 27.3.89 & No. 5(1)/93-SSI Bd. dt. 25.10.93
  2. Notification No. SO 232 (E), dt. 2.4.91
  3. DO No. 4/91-SSI Bd. dt. 7.5.1991, alongwith enclosures.

Sir,

  1. A new category of 'Small Scale Industrial Undertakings' was introduced in the notification of the Ministry of Industry, Deptt. of Industrial Development No. SO 232 (E) dated 2nd April, 1991 wherein it was defined that an industrial undertaking with an investment in fixed assets in plant and machinery upto Rs. 75 lacs shall be registered as a small scale industrial undertaking provided the unit undertakes to export at least 30% of the annual production by the end of the 3rd year from the date of its commencing production. Such units are generally known as export-oriented small scale industrial units. As you are aware, the investment limit in case of other small scale industrial undertakings is Rs. 60 lacs.

  1. In the explanatory memorandum circulated vide DO letter No. 4/91-SSI Bd. dated 7.5.1991 it had been stated, inter-alia, that the monitoring of the export-obligation will be done by the Office of the Chief Controller of Imports & Exports.

  2. The question of monitoring of the export obligation has been examined and reviewed carefully in this office. Upscaling of the investment limits for export oriented small scale units was done to give a boost to exports and to encourage small scale units to undertake exports competitively. Exports have now assumed critical importance in the national economy. Keeping these facts in mind, monitoring of export obligation will be done by the administrative department and the authorities responsible for registration of such industrial undertakings. In other words, the monitoring of export obligation of so registered small scale industrial undertakings will be undertaken by the State Director of Industries and, in particular, the General Managers of the District Industries Centres or whoever may be the designated authorities to register such units.

Hence, to give effect to this decision the following set of guidelines and clarifications are being issued for implementation and incorporation in the procedures for registration, follow-up and monitoring of the export obligation of so registered export-oriented small scale industrial units: -

PROCEDURAL GUIDELINES

  1. A small scale industrial undertaking with an investment limit in plant and machinery upto Rs. 75 lacs is registered as such if it undertakes to export at least 30% of the annual production by the end of the 3rd year from the date of its commencing production. Such a unit may now be termed as an "Export Oriented Unit" (EOU).

    Entry to this effect is made in the application form/certificate of permanent registration in the space provided for category/status of the unit. (Circular No. 5(1)/93-SSI Bd. & Policy, dated 25.10.93)

  2. Since such a unit is registered on the basis of a declared obligation, the same will have to be incorporated in the affidavit submitted by the applicant alongwith the application form for permanent registration certificate as a necessary condition. Hence in the format for affidavit (Ref. Circular No. 5(1)/93-SSI Bd. dated 25.10.93) an additional condition may be incorporated for EOUs after para 14 as follows: -

      "That I/We undertake an export obligation as contained in Notification NO. S.O. 232(E) dated 2.4.1991 and that this obligation is in perpetuity; and that I/we undertake to submit to the Director of Industries/Registering Authority all such returns and documents periodically as may be required and asked for in proof of fulfilling the said export obligation."

      This condition should also be incorporated as Para 9 below the permanent registration certificate in the application forms.

    3. CALCULATION OF YEAR FOR FULFILLMENT OF OBLIGATION

  3. Under the provision of the notification, the unit has to achieve 30% export obligation at the end of the third year from the date of its commencing production. For the purposes of monitoring, the financial year will be taken into account and the 'relevant year' is defined as follows:

      RELEVANT YEAR: It is reckoned as the financial year in which and beyond which (in perpetuity or till the unit is deregistered) the unit will be under obligation to export at least 30% of its production.

    1. In case of existing units the relevant year is defined as the financial year during which the cut off date falls. Cut off date is defined as "date of endorsement plus three years" e.g. a unit already in production obtains endorsement on 5.4.1991. The cut off date is 5.4.1994. Relevant year is financial year 1994-95.

      2. (Explanation: For units with investment limits less than 60 lacs, the word 'endorsement be used. For units with investment limits between 60 and 75 lacs, the word 'certificate' be used.)

    2. In case of new units the relevant year is defined as the financial year succeeding the year during which the cut off date fails. Cut off date is defined as "date of commencement of production plus 3 years", e.g. unit commences production on 5.4.91. The cutoff date is 5.4.1994. relevant year is financial year 1995-96.

    4. STATEMENT OF EXPORTS

  4. iv) Each such export-oriented unit shall be mandatorily required to furnish a yearly "Statement of Exports" in the prescribed format as given at Annexure - 'A'. This statement shall be submitted by the concerned unit by 30th of June every year pertaining to the performance details of the preceding year. Every unit shall be required to furnish this statement once it commences production irrespective of whether it has reached the "relevant year". This will enable the registering authority to monitor the growth of exports.

  5. v) It is clarified that the export obligation of 30% has to be verified in totality and it is irrespective of whether the same exports have also been taken into account in respect of any other export obligation imposed on the unit. In other words, the registering authority need not concern himself with any other export obligation on the unit for the time being in force.

  6. vi) The calculation of 30% will be done in terms of current value of production and exports.

  7. vii) The registering authority shall maintain suitable records in this regard and the Director of Industries shall prescribe suitable procedures for monitoring of export obligation at their end. The registering authorities are required to ensure that the units are actually fulfilling their export obligation.

  8. viii) It shall be the responsibility of the registering authority to ensure that the export obligation are fulfilled by the units. If the unit is not found to fulfil the export obligation at any time, steps will be immediately and necessarily taken to de-register the unit, or de-categorise the unit as EOU, as the case may be. A copy of such orders of de-registration shall also be communicated to the office of DC(SSI).

    In such cases of non-fulfillment of export obligation no other action need to be taken except its deregistration or de-categorisation of status as EOU. However, a unit once deregistered, should not be granted fresh registration as an export oriented unit.

  9. ix) Director of Industries shall compile and keep the data in respect of export obligation and furnish to this office an annual statement in respect of the monitoring of export obligation in the proforma placed at Annexure 'B'.

    The statement may be sent to this office on yearly basis. The report for the preceding year should be sent on or before 30th August of the next year.

    It is requested that action as above may be initiated immediately. While the base guidelines have been indicated above, Director of Industries may incorporate detailed guidelines and evolve detailed procedures to carry out the monitoring of the export obligation.

    This step is not intended as an over reaching policing device and adequate care needs to be taken to see that small industries are not put to undue hardship and made victims of unnecessary red tape. While it is necessary to monitor export obligation, it may be ensured that the regulatory procedure is not mechanical. Cases of breach of export obligation will need to be seen in the context of the overall export performance of the unit over a period of time. Simultaneously, States may take steps to nurture and promote such identified export oriented units.

Kindly acknowledge receipt of letter.

Yours faithfully,

Sd/-
(RAJU SHARMA)
Director (SSI Bd.& Policy)

ANNEXURE 'A'

STATEMENT OF EXPORTS

Date of commencement of production:

Relevant year:

NAME OF UNIT

REGISTRATION NO.& DATE

REPORT FOR YEAR

 

ENDING:

  


(ANNUAL PROD.)

EXPORTS DURING YEAR

EXPORTS AS %

(Rs. in lacs)

(Rs. in lacs)

OF PRODUCTION



NOTE:

  1. Average exchange rates may be taken to convert foreign exchange amount into Rupees.



******

ANNEXURE - 'B'

STATEMENT ON MONITORING OF EXPORTS OBLIGATION



STATE

YEAR ENDING

  1. No. of export oriented units registered;

  2. Total production of units;

  3. Total exports of units;

  4. No. of units in the "less than 3 years" category;

  5. No. of units to be monitored;

  6. No. of units fulfilling export obligation;

  7. No. of units violating export obligation;

  8. No. of units de-registered;

  9. No. of units action against whom pending.



Note:

(iv) + (v) = (i)

 

(vi) + (vii) = (v)

 

(viii) + (ix) = (vii)