TaxTMI 
TaxTMI 
TaxTMI 
Executive Summary
India’s Manufacture and Other Operations in Warehouse Regulations (MOOWR) scheme, governed by Section 65 of the Customs Act, 1962, is emerging as a transformative policy tool for global manufacturers. Offering duty deferment, perpetual licensing, and location flexibility, MOOWR aligns with India’s broader goals of improving ease of doing business and attracting foreign direct investment (FDI). This article explores the scheme’s core features, judicial interpretations, recent policy amendments, and strategic implications for global enterprises.
I. Core Features of MOOWR: Unlocking Operational Efficiency
1. Duty Deferment Without Interest
MOOWR allows importers to defer payment of Basic Customs Duty (BCD), Integrated GST (IGST), and applicable cesses until goods are cleared for domestic consumption. This deferment is interest-free, offering significant cash flow advantages and reducing working capital strain, especially for capital-intensive industries.
2. Full Duty Waiver on Exports
Goods manufactured in bonded facilities and exported are exempt from deferred duties, creating a clean and efficient export pathway. This feature enhances India’s attractiveness as a manufacturing hub for global supply chains.
3. Perpetual Licensing
Unlike SEZ and EOU schemes, MOOWR licenses are valid indefinitely until voluntarily surrendered or cancelled. This reduces administrative overhead and provides long-term operational certainty.
4. No Export Obligation
MOOWR does not mandate any minimum export performance. Units can sell 100% of their output domestically, subject to applicable duties, making it ideal for businesses focused on the Indian market.
5. Simplified Compliance
MOOWR operates under the supervision of the jurisdictional Customs Commissioner, with relatively streamlined procedures compared to SEZ and EOU frameworks.
II. Judicial Endorsements: Expanding Scope and Clarifying Boundaries
Indian courts have played a pivotal role in shaping MOOWR’s interpretation and reinforcing its pro-business intent:
The Court ruled that power generation qualifies as “manufacture” under Section 65, expanding MOOWR’s applicability beyond traditional manufacturing sectors.
- Samsung India Electronics Pvt. Ltd. vs. Union of India (Delhi High Court, 2022)
The Court emphasized that MOOWR is a beneficial scheme, and authorities must not impose conditions beyond those prescribed in law. This reinforced MOOWR’s alignment with India’s Ease of Doing Business agenda.
- Hindalco Industries Ltd. vs. Union of India (Bombay High Court, 2023)
The Court upheld that depreciation on capital goods is not allowed during DTA clearance, clarifying a key limitation for capital-intensive sectors.
III. Budget 2024–25 Amendment: Balancing Policy Flexibility and Investment Certainty
Clause 101 of the Finance Bill 2024 empowers the Central Government to exclude certain goods or processes from MOOWR’s scope via notification. While this provides flexibility to adapt to evolving trade dynamics, it introduces regulatory uncertainty for industries planning long-term investments under the scheme.
- Strategic Implication
Businesses must now closely monitor CBIC notifications and policy updates to mitigate risks to project viability and investment planning.
IV. Operational Challenges and Strategic Considerations
Despite its strengths, MOOWR presents certain challenges:
Challenge | Impact |
No Depreciation on Capital Goods | Full duty payable on original import value during DTA clearance |
No RoDTEP/Drawback Incentives | Exporters lose access to key export benefits |
Procedural Complexity | Valuation disputes and multiple filings for domestic clearances |
Awareness Gap | Limited understanding among field formations and trade bodies |
V. Strategic Recommendations for Global Enterprises
- Evaluate MOOWR vs. SEZ/EOU
For units with high domestic sales and import dependency, MOOWR may offer superior flexibility despite the loss of export incentives.
- Legal Safeguards
Seek advance rulings or legal opinions for non-traditional manufacturing activities to ensure eligibility.
- Policy Monitoring
Establish internal mechanisms to track CBIC notifications under Clause 101 and assess their impact on operations.
- Stakeholder Engagement
Collaborate with industry associations to advocate for inclusion of RoDTEP/Drawback and depreciation benefits under MOOWR.
- Internal SOPs
Develop robust documentation and valuation protocols to manage procedural challenges and ensure compliance.
VI. SEZ vs. EOU vs. MOOWR: Strategic Comparison
Parameter | SEZ | EOU | MOOWR |
Legal Framework | SEZ Act, 2005 | Customs Act + FTP | Customs Act, Section 65 |
Location Requirement | Notified SEZ zone | Anywhere in India | Anywhere with bonded facility |
Export Obligation | Mandatory NFE | Positive NFE over 5 years | None |
Duty on Imports | Exempt | Exempt | Deferred |
Duty on DTA Sales | With duty + penalty | With duty + penalty | With duty only |
Depreciation on Capital Goods | Allowed | Allowed | Not allowed |
RoDTEP/Drawback Eligibility | Eligible | Eligible | Not eligible |
GST Treatment | Zero-rated | Normal | Normal |
License Validity | Subject to renewal | Subject to renewal | Perpetual |
Ease of Setup | Complex | Moderate | Simplified |
Best Suited For | Large exporters | Mid-sized exporters | Domestic-focused importers |
VII. Strategic Use Cases
Business Scenario | Recommended Scheme |
Large-scale export manufacturing | SEZ |
Mid-sized export unit with flexible location | EOU |
Domestic-focused unit with high import dependency | MOOWR |
Capital-intensive unit with frequent DTA clearance | EOU or SEZ |
Company seeking ease of setup and perpetual license | MOOWR |
Conclusion
MOOWR represents a strategic shift in India’s approach to manufacturing and trade facilitation. Its cash flow-friendly, location-flexible, and compliance-light framework makes it an attractive proposition for global enterprises targeting the Indian market. While SEZ and EOU schemes continue to serve export-driven models, MOOWR is uniquely positioned to support domestic-focused manufacturing with high import dependency.
As India refines its trade policy architecture, MOOWR offers a future-ready platform for global businesses to invest, manufacture, and grow.