EOU notes
EOU vs SEZ vs STP/EHTP: Comparison Table
The core distinction: EOU is unit-based, SEZ is area-based, and STP/EHTP are sector-specific schemes within the same FTP chapter as EOUs.
| Feature | EOU | SEZ unit | STP / EHTP |
|---|---|---|---|
| Basis | Unit-based | Area-based (notified zone) | Unit-based, sector-specific |
| Legal framework | FTP 2023 Chapter 6 | SEZ Act 2005, SEZ Rules 2006 | FTP 2023 Chapter 6 (MeitY/STPI administration) |
| Location | Anywhere, subject to approvals | Inside the notified SEZ | Anywhere, subject to approvals |
| Obligation | Positive NFE | Positive NFE | Positive NFE |
| Domestic sales | Permissible DTA sales with duty | DTA clearance treated like import | Permissible DTA sales with duty |
Common statement-question traps
- 'Every EOU must be in an SEZ' — false.
- 'SEZs are governed by FTP Chapter 6' — false; they have their own Act.
- 'EOUs cannot sell anything in India' — false.
- 'An SEZ is foreign territory' — false; it is deemed foreign territory only for specified trade and duty purposes.
Conversion and exit
The policy provides for an EOU to exit the scheme on payment of applicable duties and fulfilment of obligations, and for conversion into an SEZ unit or between Chapter 6 schemes under specified conditions.
Study Library and practice
- Study Library: trade deficit and the external sector
- SEZ explainer: Act 2005, DTA and customs
- EOU vs SEZ quick explainer
- Take the EOU practice quiz
- Daily current-affairs quiz
Official references
FAQs
Is an STP an SEZ?
No. Software Technology Park units fall under FTP Chapter 6 like EOUs; SEZs are governed by the SEZ Act 2005.
Can an EOU convert into an SEZ unit?
Yes, subject to conditions in the policy.