Decoding the new MOOWR Scheme

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Decoding the new MOOWR Scheme

Recently, the export incentives and duty benefits schemes like MEIS / EOUs etc., provided to Indian manufacturers, involved in exports of goods was challenged at World Trade Organisation (WTO). While the decision of the Dispute Settlement Body is averse to India’s positioning, an appeal filed by India is pending in WTO. Accordingly, Indian Government has started re-evaluating the existing trade facilitation and incentives to be compliant with WTO norms. Krishna Barad, Partner/ Customs & International Trade/ Indirect Tax, BDO India LLP, throws light on the amendments and its impact on EXIM. 

The Union Government, in an initiative to encourage local manufacturing, revamped the earlier ‘Manufacturing & Other Operation in Warehouse Regulation’ (MOOWR), which was first introduced in 1966 under Customs law allowing owner of any warehoused goods to carry out manufacturing processes or other operations in such warehouse, subject to specific conditions. The said scheme has been given fresh lease of life by altering certain key compliance requirements in the revised MOOWR, 2019, notified on 1st October 2019 to align with ‘Atma Nirbhar Bharat’ plank of the Government. 

The revised scheme has caught the eyeball of many corporates in India, who cater not only to international market but also to domestic customers. Some large multinational companies are seriously considering this option in view of the distinct advantage and ease of administration, unlike other export formats.

When the raw materials or capital goods are imported, the import duty on them is deferred. If these imported inputs are utilized for exports, the deferred duty is exempted. Only when the finished goods are cleared to the domestic market, import duty is to be paid on the imported raw materials used in the production. Import duty on capital goods is to be paid if the capital goods are cleared to the domestic market. 

The salient features, eligibility to apply under new MOOWR scheme, procedures, and key benefits under these new regulations are discussed here. 


Deferred Duty on Import of Raw Material: Until the clearance of finished goods, duty on import of raw material used in manufacturing or other options is deferred and will be waived in case finished goods are exported. Unlike other Bonded Warehouse, there is no time limit prescribed for consumption of the raw material stored/imported by the MOOWR unit. The custom duty is payable on scrap generated during manufacturing. The MOOWR unit needs to submit the self-declared, Standard Input Output Norms at the time of submitting the MOOWR registration application.

Deferred Duty on Capital Goods: Until the clearance from bonded facility for home consumption, Duty on capital goods used in manufacturing or other operations is deferred and can be avoided, if goods are exported. Currently there is no depreciation permitted on the capital goods, which are to be disposed-off in the domestic market after considerable usage or its life cycle. 

Seamless transfer between Warehouses: A licensee shall transfer warehoused goods from one bonded facility to another without payment of duty. The liability to pay the deferred duty is also shifted to the transferee of goods. 

No Export Obligation: An entity may sell entire 100% of goods manufactured in Bonded Warehouse in domestic market, in the absence of export obligation. Appointment of warehouse keeper: The responsibility of the proper officer to oversee the operations of a warehouse has been shifted to a self-appointed warehouse keeper.


Under new MOOWR 2019, following persons are eligible to operate: -

  • A person who has been granted a license for a warehouse under section 58 of the Customs Act (the Act), in accordance with Private Warehouse Licensing Regulations, 2016.
  • A person who applies for a license for a warehouse under section 58 of the Act, along with permission for undertaking manufacturing or other operations in the warehouse under section 65 of the Act. An application is required to be made to the Principal Commissioner of Customs or the Commissioner of Customs along with an undertaking:
  • To maintain accounts of receipt and removal of goods in digital form and furnish the same digitally to the bond officer on monthly basis,
  • To inform the input-output norms and any revision in the norms wherever considered necessary, and
  • To execute a bond in the specified format.

Upon satisfaction and due verification of the application, the Principal Commissioner of Customs or Commissioner of Customs shall grant permission to carry-out operations under the provisions of these regulations. The permission granted remains valid till it is cancelled or surrendered, or the license under Section 58 is cancelled or surrendered.


  1. Easy and hassle-free online application process through a common application cum approval form.
  2. The Principal Commissioner of Customs or the Commissioner of Customs acts as a single point of contact for all approvals.
  3. Simplified digital record-keeping and monthly return filing of the receipt, storage, operations, and removal of the goods in the warehouse.
  4. New manufacturing facility can be setup or existing unit can be converted into bonded facility irrespective of its location in India.
  5. No investment threshold or export obligations, monitoring unlike other schemes.
  6. Unlimited warehousing period for storage of capital and non-capital goods until clearance or consumption without any added interest liability.
  7. No physical control by custom authorities.


MOOWR provides benefits with extended operational flexibility without burdening the manufacturers with time consuming compliances and procedural requirements. These regulations are a major step for India to become a global manufacturing hub as it is attracting huge foreign investments and boosting exports.

The MOOWR unit need not to take any authorization for import of capital goods or raw material as required to carry-out the manufacturing activities. There is no export obligation or obligation to achieve net foreign exchange earnings as required in other schemes under Foreign Trade Policy or SEZ/FTWZ. The MOOWR unit can procure goods from the Custom Bonded Warehouses including SEZ without payment of duty. MOOWR unit can send the goods for Job Work / Subcontract Manufacturing as well. New entrants from across the world are planning to set-up their manufacturing units in India, which will pave way to achieve the goal of ‘Atma Nirbhar Bharat’. 

Key issues which will help the trade and needs clarification/resolution from Central Board of Indirect Taxes & Customs (CBIC), Ministry of Finance, Government of India are: -

  • Depreciation on the used capital goods, when disposed-off for home consumption.
  • Relocation of existing EOU/SEZ under the scheme
  • Procedural relaxation in terms of compliance with allied Acts.
  • Storage of finished products into another private bonded warehouse
  • Eligibility or frequency of change in the Bill of Material (BOM), which influences Standard Input Output Norms declared at the time of application.
  • Relaxation in custom duty payment on the scrap generated during product manufactured and exported.
  • Scrap destruction facility unlike EOUs
  • Exemption from registration for Pharma products, who are operating under the MOOWR scheme.
  • Benefits on export incentive schemes under Foreign Trade Policy or RODTEP
  • Flexibility to conduct the contract manufacturing for foreign entity / buyer.
  • Permit set-up of MOOWR Parks on the side of Logistics Park to have multi MOOWR units operating in one demarked area to bring efficiency and reduced investment/operating costs.

While the scheme appears industry friendly, clarity on these aspects can make the scheme more agile and bring about certainty for industry and the investors.

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