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MOOWR VS EPCG: SUPPORTING MANUFACTURING AND EXPORTS

Leave a Comment / Blog / By Global Tax Masters

The MOOWR (Manufacture and Other Operations in Warehouse Regulations) scheme and
the EPCG (Export Promotion Capital Goods) scheme are both designed to support
businesses involved in manufacturing and exporting, but they cater to different
needs and offer distinct advantages. This document explores why the MOOWR scheme
was introduced despite the existence of the EPCG scheme, highlighting their key
differences and complementary aspects.

DIFFERENCES AND COMPLEMENTARITY

While both MOOWR and EPCG schemes aim to support manufacturing and exporting
businesses, they have significant differences in their approach and benefits.
Understanding these differences is crucial for businesses to choose the most
suitable scheme for their needs.

KEY DIFFERENCES: FLEXIBILITY AND SIMPLICITY

MOOWR SCHEME

The MOOWR scheme is designed to be more straightforward and flexible. It allows
businesses to import goods without upfront duty payment and store them in a
bonded warehouse, providing flexibility in manufacturing and storage without
stringent export obligations.

EPCG SCHEME

The EPCG scheme requires businesses to meet specific export obligations, which
can be complex and burdensome, especially for smaller enterprises.

EXPORT OBLIGATIONS AND APPLICABILITY

NO EXPORT OBLIGATION (MOOWR)

Unlike EPCG, the MOOWR scheme does not impose mandatory export obligations.
Companies can sell their products in the domestic market without having to meet
export targets, making it more accessible to businesses focusing on the local
market.

EXPORT OBLIGATION (EPCG)

Requires fulfillment of export obligations, which might not be suitable for
companies with limited export capacity.

WIDER APPLICABILITY (MOOWR)

Applicable to both export-oriented and domestic oriented units. This broadens
the scope for businesses that want to cater to the domestic
market primarily.

EXPORT FOCUS (EPCG)

Primarily targets exporters, offering benefits mainly to those who can meet the
export criteria.

CASH FLOW AND COMPLIANCE

1


Cash Flow Management (MOOWR)

Provides better cash flow management by allowing deferred payment of customs
duties, enhancing liquidity for businesses.

2


Cash Flow Management (EPCG)

While it also provides duty concessions, it ties up capital in meeting export
commitments.

3


Ease of Compliance (MOOWR)

Offers simpler compliance procedures, making it easier for businesses to
navigate without extensive documentation or complex approvals.

4


Ease of Compliance (EPCG)

Involves detailed procedures for obtaining licenses and fulfilling export
obligations, which can be cumbersome.



RATIONALE FOR INTRODUCTION OF MOOWR

ENCOURAGING DOMESTIC MANUFACTURING

The MOOWR scheme was introduced to stimulate domestic manufacturing by removing
duty-related entry barriers, allowing more manufacturers to benefit from duty
deferment.

ENHANCING EASE OF DOING BUSINESS

The scheme simplifies regulatory procedures, aligning with the government’s goal
to improve the ease of doing business in India.

BROADER ECONOMIC STRATEGY

By not imposing export obligations, the scheme supports the Make in India
initiative, encouraging both domestic and international market-focused
production.

Overall, the introduction of the MOOWR scheme aimed to provide a more flexible,
accessible, and less compliance-heavy option for manufacturing businesses,
especially those that do not necessarily have a significant export focus.

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 * MOOWR vs EPCG: Supporting Manufacturing and Exports
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