Para 3 - Structure of the Scheme - European Economic Community International Institutional Partners (ECIIP) Scheme, 1993

Structure of the Scheme. 3. (1) The European Economic Community has developed a financial instrument called the European Community International Investment Partners (ECIIP) Scheme to promote joint ventures in Asia, Latin America and the Mediterranean countries. EEC signs framework agreements with financial institutions in the target country, and makes available its financial assistance through these partner financial institutions. ECIIP specifically aims its assistance at small and medium sized companies, but larger companies can also benefit, if their projects are particularly interesting for the development of the country. (2) EEC has so far entered into Memoranda of Understanding (MOUs) with three financial institutions in India, viz, ICICI, IDBI and the Exim Bank of India. EEC may in future decide to have similar MOUs with other financial institutions and/or banks in India. (3) The European Economic Community has expressed an intention that the community does not intend to repatriate interest, dividends, or capital gains arising out of the investments under the ECIIP Scheme. Noting the expressed intention of the community that the community does not intend to repatriate proceeds of sale of shares or dividends arising out of the investments made under ECIIP Scheme, and intends to reinvest such proceeds in India, which, is also the preferred arrangement in so far as the Government of India is concerned, the Government of India has inserted a new clause, (23BBB) in section 10 of the Income-tax Act to provide income-tax exemption on any income of the European Economic Community derived in India by way of interest, dividends or capital gains from investments made out of its funds under this Scheme. This exemption will take effect from 1st April, 1994, and will, accordingly, apply in relation to the assessment year 1994-95 (relevant for the income year 1993-94) and subsequent years. All such incomes derived by the European Economic Community on or after 1st April, 1993, would be tax exempt accordingly.