TaxTMI 
TaxTMI 
TaxTMI 
Below is a comprehensive, professionally drafted comparative analysis of the major export-promotion and manufacturing support schemes available under the Foreign Trade Policy (FTP) and allied legislations of India — MOOWR, PLI, SEZ, EOU, STPI, Advance Authorisation Scheme, and EPCG.
1. Introduction
India’s foreign trade regime offers multiple fiscal, customs and policy-driven incentives to promote domestic manufacturing, exports and employment generation. Each of these schemes—MOOWR (Manufacturing and Other Operations in Warehouse Regulations, 2019), Production Linked Incentive (PLI) Schemes, Special Economic Zones (SEZs), Export Oriented Units (EOUs), Software Technology Parks of India (STPIs), Advance Authorisation (AA) and Export Promotion Capital Goods (EPCG)—operate within distinct statutory frameworks.
While the objectives converge on boosting exports and attracting investment, the modalities, benefits, and compliance requirements differ significantly. The following comparative analysis elucidates their legal framework, eligibility, obligations, advantages, limitations, and settled legal positions.
2. Statutory Framework and Nature of Schemes
Scheme | Statutory / Regulatory Basis | Administering Authority | Core Objective |
MOOWR, 2019 | Section 58 & 65, Customs Act, 1962; CBIC Notification 69/2019-Cus(NT) | Jurisdictional Customs Commissionerate | Deferred customs duty on import of capital goods and raw materials for domestic manufacture. |
PLI Scheme | Cabinet-approved sectoral notifications; Implemented under Department of Commerce / concerned line Ministries | Respective line ministries (MeitY, DoT, DPIIT, etc.) | Incentivise incremental sales and domestic value addition. |
SEZ Scheme | Ministry of Commerce (Department of Commerce) | Promote export-driven industrial clusters with duty-free environment. | |
EOU Scheme | Chapter 6 of FTP & Handbook of Procedures | Development Commissioner / SEZ authorities | 100% export-oriented units operating in DTA with duty concessions. |
STPI Scheme | Policy Resolution of 1986; STPI Society under MeitY | STPI (Ministry of Electronics & IT) | Promote software exports and IT-enabled services. |
Advance Authorisation (AA) | DGFT | Duty-free import of inputs for manufacture of export products. | |
EPCG Scheme | DGFT | Import of capital goods at zero / concessional duty against export obligation. |
3. Eligibility and Coverage
Scheme | Eligible Entities / Sectors |
MOOWR | Any manufacturer in India (export-oriented or domestic) importing goods for in-warehouse processing. No minimum investment. |
PLI | Sector-specific manufacturers fulfilling threshold investment and incremental turnover criteria. |
SEZ | Developer or unit set up in a notified SEZ for export of goods/services. |
EOU | Units undertaking to export entire production (subject to permitted DTA sales). |
STPI | IT and software development companies engaged in exports of software / ITES. |
Advance Authorisation | Exporters requiring import of inputs for manufacturing export goods. |
EPCG | Exporters importing capital goods for producing export goods / services. |
4. Statutory Fees and Compliances
Scheme | Major Fees / Compliance |
MOOWR | No upfront duty; warehouse licensing fee as per Customs; monthly returns; online permission for operations. |
PLI | No statutory fee; however, mandatory reporting of sales, investment and value addition; periodic audit certification. |
SEZ | One-time application fee; lease rentals; SEZ Unit approval; annual performance reports; bonded-warehouse procedures; compliance with SEZ Rules, 2006. |
EOU | Application fee under FTP; customs bonding; annual performance report; B-17 bond execution. |
STPI | Registration fee; annual service charges; Softex declarations; periodic returns. |
Advance Authorisation | Application fee via DGFT; input–output norms adherence; eBRC submission for redemption. |
EPCG | Application fee via DGFT; installation certificate; annual returns on export performance. |
5. Export Obligation (EO) and Redemption
Scheme | Export Obligation / Time Frame | Redemption Process |
MOOWR | No mandatory EO; duty liability arises only when goods are cleared for home consumption. | Not Applicable but duty liability arises only when goods are cleared for home consumption. |
PLI | Incremental sales targets; failure leads to loss of incentive. | Incremental Sales Targets |
SEZ | Positive Net Foreign Exchange (NFE) to be maintained over 5-year block; monitored by DC. | Positive Net Foreign Exchange. |
EOU | Must achieve positive NFE over 5-year block; DTA sales subject to conditions. | Positive Net Foreign Exchange. |
STPI | Similar to EOUs – must maintain positive NFE on exports. | Positive Net Foreign Exchange. |
Advance Authorisation | Fulfilling export of resultant product within prescribed period (usually 18 months); | redemption via eBRC submission to DGFT. |
EPCG | Fulfil export obligation equivalent to 6 times of duty saved within 6 years; | redemption through DGFT (Redemption / EODC). |
6. Benefits / Cost Advantage Analysis
Scheme | Key Benefits | Indicative Cost-Benefit |
MOOWR | Deferred customs duty till clearance for home consumption; interest-free deferment; no export obligation; available for both DTA and export units. | Neutral for export and domestic sale; major saving on working capital through duty deferment. |
PLI | Direct financial incentive (4%–6% or as notified) on incremental sales. | Substantial cash inflow based on turnover; promotes scale and localisation. |
SEZ | Duty-free import/procurement; GST exemption on supplies; income-tax benefits (phased out for new units); simplified customs; single-window clearance. | Strong fiscal incentives; limited domestic market access (treatment of DTA sales). |
EOU | Duty-free import of raw materials/capital goods; refund of GST on exports; limited DTA sales allowed. | Similar to SEZ but within DTA; requires continuous compliance and NFE tracking. |
STPI | Duty-free imports of hardware; simplified export procedures for software; income-tax benefits for legacy units. | Beneficial for IT sector; administrative ease. |
Advance Authorisation | Duty-free import of inputs required for export products. | Duty exemption on proportionate inputs; best for raw-material-intensive industries. |
EPCG | Concessional/zero duty import of capital goods against EO. | Reduces capital cost; beneficial for expansion / modernisation projects. |
7. Pros and Cons
Scheme | Advantages | Limitations |
MOOWR | Simplified; open to all sectors; no EO; perpetual validity; customs supervision minimal. | No remission of duty on eventual domestic sales; no GST exemption; no direct cash incentive. |
PLI | Direct incentive; promotes scale and employment. | Strict eligibility; high investment thresholds; sector-specific. |
SEZ | Fiscal and procedural autonomy; world-class infrastructure. | Sunset on income-tax benefits; DTA sales treated as imports; withdrawal of incentives under WTO scrutiny. |
EOU | Duty exemptions with DTA flexibility; manageable EO. | Complex bonding procedures; gradual rationalisation of benefits vis-à-vis GST regime. |
STPI | Tailor-made for IT exporters; minimal customs compliance. | Limited to software/ITES; diminishing fiscal support. |
Advance Authorisation | Immediate duty exemption; supports working capital. | EO tracking and strict timelines; non-transferable. |
EPCG | Capital cost reduction; long EO period. | Stringent EO; risk of duty recovery with interest/penalty if not fulfilled. |
8. Settled Legal Position and Judicial Pronouncements
MOOWR: Judicial and administrative clarifications (e.g., CBIC Circular 34/2020-Cus) confirm that the scheme is export neutral and non-incentive-based; warehoused goods are outside the levy until cleared. Courts have upheld that no interest or duty is payable until ex-bonding for home consumption.
SEZ: The Supreme Court in Commissioner of Customs vs. Tiger Steel Engineering (2020) affirmed that SEZs are treated as foreign territory for customs purposes, eligible for exemptions subject to SEZ Act conditions.
EOU / STPI: Tribunals have held that DTA sales in compliance with FTP conditions do not constitute violation of export obligation; only excess domestic clearances attract duty (e.g., Kiran Spinning Mills v. CCE, 2002 (146) ELT 40 (SC)).
Advance Authorisation / EPCG: DGFT’s powers of regularisation and EO extension are discretionary but bound by FTP norms. In Samsung India Electronics Pvt. Ltd. v. Union of India (2019), Delhi HC emphasised procedural fairness in EO redemption adjudication.
PLI: Being policy-driven, disputes are largely administrative; principles of legitimate expectation and promissory estoppel will apply once investment and eligibility are fulfilled.
9. Comparative Cost–Benefit and Strategic Suitability
Objective | Most Suitable Scheme |
Deferred customs duty without export obligation | MOOWR |
Cash incentive for incremental domestic manufacturing | PLI |
Comprehensive export-oriented industrial enclave | SEZ |
Standalone export unit in DTA | EOU / STPI |
Duty-free import of inputs | Advance Authorisation |
Capital goods at concessional duty | EPCG |
Illustrative Cost Impact:
A manufacturer importing capital goods worth Rs.10 crore at 7.5% duty would save Rs.75 lakh upfront under MOOWR (duty deferred) or EPCG (duty exempt with EO).
Under PLI, if incremental sales of Rs.100 crore attract a 5% incentive, the net incentive equals Rs.5 crore.
SEZ/EOU can avail duty-free inputs and GST exemptions translating to ~18–25% cost advantage on input base, subject to EO compliance.
10. Conclusion
Each scheme serves a distinct policy purpose within India’s trade and industrial ecosystem:
MOOWR provides duty deferment without export compulsion—ideal for capital-intensive manufacturers.
PLI delivers direct fiscal incentive linked to performance, fostering global-scale production.
SEZ / EOU / STPI continue as export-promotion regimes offering comprehensive duty exemptions within a bonded framework.
Advance Authorisation and EPCG remain transaction-based exemptions tied to export performance.
For legal and strategic evaluation, the choice of scheme must align with a unit’s product profile, market orientation (domestic or export), investment horizon, and compliance capacity. A calibrated combination—such as MOOWR for customs deferment alongside PLI or EPCG—can optimise both fiscal and operational efficiency within the contours of prevailing law.
In essence, the multiplicity of schemes reflects India’s transition from export-driven incentives to production-linked, compliance-based facilitation—anchored in transparency, WTO-compatibility, and sustainable manufacturing growth.
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