For manufacturers that rely on imported machinery, raw materials, components or consumables, customs duty paid at the time of import can place a significant burden on project cost and working capital.
The Manufacture and Other Operations in Warehouse Regulations, 2019, commonly known as the MOOWR Scheme, allow eligible businesses to undertake manufacturing or other permitted operations in a licensed customs bonded warehouse while deferring customs duty on imported goods.
Osgan Consultants provides end-to-end support for evaluating, obtaining and operating a MOOWR facility in India. Our assistance covers feasibility and financial assessment, Customs licensing, process design, documentation, implementation and post-approval compliance.
Planning a new manufacturing facility or evaluating MOOWR for an existing plant? Speak with a MOOWR Advisor.
What is the MOOWR Scheme?
MOOWR is a customs bonded manufacturing framework governed principally by Section 65 of the Customs Act, 1962 and the Manufacture and Other Operations in Warehouse (No. 2) Regulations, 2019.
Under the scheme, a factory or a demarcated part of a factory may be licensed as a private bonded warehouse. Imported capital goods, raw materials, components and other eligible goods can then be brought into the licensed premises without immediate payment of customs duty and used for approved manufacturing or other operations.
The duty treatment depends on how the imported goods or the resultant goods are ultimately cleared. Finished goods may be exported or sold in India, subject to the applicable customs and GST procedures.
MOOWR is therefore not merely an export incentive. It is a manufacturing and duty-deferment framework that can also be used by businesses serving the Indian market.
Key Benefits of the MOOWR Scheme
Customs duty deferment on imported inputs
Customs duty on imported raw materials, components and consumables is deferred when the goods are warehoused. Where the resultant goods are exported in accordance with the prescribed procedure, the corresponding import-duty treatment is available under the Customs Act and the MOOWR framework. Where the resultant goods are cleared for domestic consumption, the applicable duty on the imported content becomes payable at the prescribed stage.
Customs duty deferment on imported capital goods
Duty on imported machinery and capital goods is deferred while they remain within the bonded facility. This can materially reduce the upfront cash requirement for a new project, capacity expansion or modernisation programme.
No mandatory export obligation
Unlike schemes linked to a specified export commitment, MOOWR does not prescribe a minimum export obligation. A unit may manufacture for export, for the domestic market, or for a combination of both, subject to the applicable clearance procedures.
Improved working-capital efficiency
By postponing customs duty until the relevant taxable clearance, a business may retain funds for plant installation, procurement, production and business expansion. The actual benefit depends on the import profile, production cycle, domestic-export mix and cost of compliance.
Flexibility for new and existing facilities
Both a proposed manufacturing unit and an existing factory may be considered for MOOWR. Depending on the operational model, the entire premises or a clearly demarcated area may be proposed for licensing.
No general geographical restriction
A MOOWR facility is not required to be located in a port area, special economic zone or other designated industrial enclave. The proposed premises must, however, satisfy Customs regarding control, security, record-keeping and supervision.
Movement between bonded warehouses
Warehoused goods may be transferred from one customs bonded warehouse to another without payment of duty at that stage, subject to statutory permission, documentation and secure movement procedures.
Long-term operating framework
A private warehouse licence ordinarily continues unless cancelled or surrendered. For a Section 65 warehouse, capital goods may remain warehoused until clearance and other goods until consumption or clearance, subject to the Customs Act and continued compliance.
How Customs Duty Works Under MOOWR
MOOWR is best understood as a duty-deferment mechanism, not an unconditional customs exemption.
| Transaction |
Broad customs treatment |
| Import of eligible raw materials or components into the bonded facility |
Customs duty is assessed but payment is deferred under the warehousing framework. |
| Use of imported inputs to manufacture goods that are exported |
The export is undertaken under the prescribed bonded-manufacturing procedure. Import-duty liability on the inputs is dealt with under the applicable provisions of the Customs Act and the MOOWR framework. |
| Clearance of resultant goods into the Domestic Tariff Area |
Applicable customs duty relating to the imported warehoused goods used in the resultant goods is paid in the prescribed manner. GST applies to the domestic supply in accordance with GST law. |
| Import and use of capital goods within the bonded facility |
Customs duty remains deferred while the capital goods remain warehoused and are used for permitted operations. |
| Domestic clearance of imported capital goods |
Applicable customs duty becomes payable in accordance with the valuation and clearance provisions in force at the time. |
| Transfer of warehoused goods to another bonded warehouse |
Transfer may take place without payment of duty at that stage, subject to approval and prescribed movement controls. |
The exact duty consequence should be mapped product-wise and transaction-wise before implementation. Tariff classification, exemption notifications, project imports, trade agreements, anti-dumping duty, safeguard measures, IGST credit and the proposed domestic-export mix can materially alter the commercial result.
Who Should Consider MOOWR?
The scheme may be commercially relevant for:
- Manufacturers importing high-value machinery or production lines;
- Businesses with a substantial imported raw-material or component cost;
- Companies setting up a new plant or undertaking capacity expansion;
- Manufacturers with long inventory or production cycles;
- Businesses supplying both Indian and overseas customers;
- Contract manufacturers and businesses undertaking processing, assembly, testing, repair, packing or other permitted operations;
- Companies seeking a long-term alternative to export-obligation-based schemes; and
- Overseas groups establishing or expanding a manufacturing base in India.
MOOWR has been considered across sectors such as electronics, automotive and auto components, engineering, chemicals, pharmaceuticals, medical devices, renewable-energy equipment, consumer products, aerospace and defence. Eligibility and financial suitability must be evaluated with reference to the specific goods, manufacturing process and regulatory approvals involved.
When MOOWR May Not Be the Right Fit
The scheme can provide a meaningful cash-flow advantage, but it is not automatically beneficial for every importer or manufacturer. A careful feasibility review is especially important where:
- Imports form only a small part of the cost of production;
- Most finished goods will be sold in India shortly after manufacture;
- The available customs-duty credit or exemption structure already reduces the import cost;
- The premises cannot be effectively demarcated or secured;
- The ERP and inventory systems cannot maintain bill-of-entry-level traceability; or
- The expected duty deferment is lower than the additional compliance and control cost.
Osgan’s feasibility assessment is designed to answer the commercial question first: Will MOOWR create a measurable benefit for the proposed operating model?
MOOWR Eligibility and Preliminary Requirements
An applicant should ordinarily be able to demonstrate:
- Legal ownership or valid possession of the proposed premises;
- A clearly identified area suitable for licensing as a private bonded warehouse;
- A defined manufacturing process or other operation proposed to be undertaken;
- Appropriate physical security, access control and storage arrangements;
- Systems for maintaining digital records of receipt, use, production, waste, clearance and balance of warehoused goods;
- The ability to furnish the statutory warehousing bond and any security required by Customs;
- Compliance with applicable GST, factory, environmental, fire, pollution-control and sector-specific laws; and
- Fit-and-proper credentials and satisfactory regulatory history of the applicant and key persons.
The requirement for a bank guarantee or other security should not be treated as universally waived. It depends on the applicable warehousing provisions, the applicant’s category, risk profile, authorisations and the conditions imposed by the jurisdictional Customs authority.
MOOWR Application and Approval Process
1. Feasibility and benefit assessment
We review the proposed imports, customs-duty incidence, manufacturing process, projected turnover, domestic-export mix, inventory cycle and funding cost. This establishes the expected duty deferment and identifies operational constraints before an application is filed.
2. Premises and process review
The proposed warehouse area, plant layout, entry and exit controls, storage zones, material flow, production process, waste handling and accounting systems are assessed from a Customs-control perspective.
3. Application strategy and documentation
The application for a private warehouse licence and permission to undertake manufacturing or other operations is prepared with the supporting documents, process note, input-output details, site plan, declarations and undertakings.
4. Filing before jurisdictional Customs
The application is filed before the competent Principal Commissioner or Commissioner of Customs. Queries and additional information requests are addressed in a structured manner.
5. Premises verification and interaction with Customs
Customs may inspect the premises and examine the proposed controls, records, security arrangements and manufacturing process. We assist the company in preparing for the inspection and responding to observations.
6. Bond, licence and Section 65 permission
Following approval, the prescribed warehousing bond and applicable security are completed. The private warehouse licence and permission for manufacture or other operations are then operationalised in accordance with the approval conditions.
7. Go-live and compliance implementation
Before the first bonded import, the business process, bill-of-entry flow, receipt controls, stock records, production accounting, waste treatment, domestic clearances, exports and periodic reporting are aligned with the approved framework.
Approval timelines vary by jurisdiction, readiness of the premises, completeness of the application and the nature of the proposed operations. A realistic implementation plan should therefore be prepared before commercial imports are scheduled.
Our MOOWR Advisory Services
Osgan Consultants assists throughout the lifecycle of a customs bonded manufacturing facility.
Feasibility and commercial assessment
- Product-wise customs-duty mapping;
- Comparison of MOOWR with normal imports and other available schemes;
- Projected duty deferment and working-capital benefit;
- Domestic-export scenario analysis;
- Review of GST and customs implications; and
- Identification of implementation cost and compliance risk.
Licensing and approval support
- Eligibility and premises review;
- Preparation of the MOOWR application and supporting documents;
- Manufacturing process note and input-output mapping;
- Assistance with private bonded warehouse licensing and Section 65 permission;
- Representation before jurisdictional Customs;
- Support during premises verification;
- Query response and follow-up; and
- Assistance with bond and security documentation.
Implementation support
- Standard operating procedures for bonded operations;
- Import, receipt, storage and production-control framework;
- Guidance on ERP registers and transaction-level traceability;
- Domestic, export and inter-warehouse clearance procedures;
- Waste and scrap accounting; and
- Training for finance, logistics, procurement, production and compliance teams.
Post-licensing compliance
- Periodic return and reconciliation support;
- Review of ex-bond and export documentation;
- Bond monitoring;
- Assistance during Customs audit or verification;
- Advisory on operational changes and expansion; and
- Support for regularisation, closure or surrender of the licence.
Why Osgan Consultants?
MOOWR sits at the intersection of Customs law, indirect tax, foreign trade policy, supply-chain design and factory operations. A workable solution requires more than filing an application.
Osgan Consultants combines regulatory understanding with implementation support. We work with the company’s finance, tax, procurement, logistics, production and technology teams to translate the approval into a process that can operate on the ground.
Our approach is built around three questions:
- Is the scheme legally available for the proposed goods and operations?
- Does the financial benefit justify the operating and compliance requirements?
- Can the company maintain the controls and traceability required after approval?
This allows management to take an informed decision and reduces avoidable difficulty at the licensing and operational stages.
Frequently Asked Questions on the MOOWR Scheme
What is the full form of MOOWR?
MOOWR stands for the Manufacture and Other Operations in Warehouse Regulations. The current bonded-manufacturing framework is principally governed by the Manufacture and Other Operations in Warehouse (No. 2) Regulations, 2019 and Section 65 of the Customs Act, 1962.
Is MOOWR a customs-duty exemption scheme?
MOOWR is primarily a customs-duty deferment framework. Imported goods enter the bonded facility without immediate payment of duty. The final duty treatment depends on whether the goods or resultant products are exported, cleared into the domestic market, transferred or otherwise disposed of.
Can an existing factory apply for a MOOWR licence?
Yes. An existing factory may apply, provided the proposed bonded premises can be identified, controlled and operated in accordance with Customs requirements. Depending on the operating model, the entire factory or a demarcated area may be considered.
Is there any minimum export obligation under MOOWR?
No minimum export obligation is prescribed under the MOOWR framework. A unit can undertake domestic sales, exports or both, subject to the applicable customs and GST procedures.
Can goods manufactured under MOOWR be sold in India?
Yes. Resultant goods may be cleared into the Domestic Tariff Area after completing the prescribed ex-bond and tax procedures and paying the applicable customs duty relating to the imported warehoused goods.
What happens to customs duty when finished goods are exported?
Exports may be undertaken without payment of import duty on the warehoused inputs in accordance with the Customs Act and prescribed procedure, subject to proper accounting of consumption, waste and clearance. The documentation and traceability must establish the use of imported goods in the exported products.
Is duty on imported machinery permanently exempt if finished goods are exported?
Not merely because finished goods are exported. Duty on imported capital goods remains deferred while the machinery stays in the bonded warehouse and is used for permitted operations. Duty consequences arise when the capital goods are cleared into the domestic market or otherwise removed, subject to the provisions then applicable.
Is a bank guarantee required for a MOOWR licence?
The requirement is not identical for every applicant. The statutory bond is mandatory, while the nature and amount of security may depend on the applicant’s status, risk profile, available exemptions and conditions imposed by Customs.
How long can goods remain in a MOOWR warehouse?
Under the Customs Act, capital goods intended for use in a Section 65 warehouse may remain warehoused until clearance. Other goods intended for such operations may remain until consumption or clearance, subject to continued compliance.
Can warehoused goods be transferred to another bonded warehouse?
Yes. Goods may be moved from one warehouse to another without payment of duty at that stage, subject to permission, prescribed documentation, secure transport and confirmation of receipt at the destination warehouse.
Is MOOWR available only to exporters?
No. The scheme can also be used by manufacturers supplying the Indian market. Its commercial advantage may, however, differ depending on the proportion and timing of domestic clearances.
Can MOOWR be combined with other customs or export schemes?
The interaction must be examined scheme by scheme and transaction by transaction. A unit registered under MOOWR is not eligible to avail RoDTEP and Duty Drawback on exports.
How long does it take to obtain a MOOWR licence?
There is no single practical timeline for every application. The period depends on the jurisdiction, completeness of documentation, preparedness of the premises, inspection observations and complexity of the manufacturing process. Early planning is advisable where imports or plant commissioning are time-sensitive.
Evaluate MOOWR Before Your Next Import or Expansion
The right question is not simply whether a company is eligible for MOOWR. The more important question is whether the scheme will produce a sustainable financial benefit without disrupting operations.
Osgan Consultants can assess the proposed model, quantify the potential duty deferment, identify compliance requirements and manage the approval and implementation process.
Contact us for a preliminary discussion on MOOWR feasibility, licensing or compliance.
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