Rajiv, a second-generation manufacturer from Faridabad, had finalized a ₹18 crore machinery import from Germany. His consultant gave him two options — MOOWR or EPCG.

One promised duty deferment without export pressure. The other offered zero customs duty — but only if he committed to large export targets for six years.

A wrong choice could lock his business into compliance stress, cash flow strain, or penalty exposure.

If you’re facing the same decision, this detailed guide on MOOWR vs EPCG will help you choose strategically — not emotionally.

Understanding MOOWR vs EPCG

Both schemes reduce import duty burden on capital goods. However, their compliance model, financial impact, and long-term flexibility differ significantly.

Before choosing, businesses must evaluate:

• Export visibility
• Working capital position
• Risk appetite
• Compliance bandwidth
• Long-term manufacturing strategy

What is MOOWR Scheme?

The Manufacturing and Other Operations in Warehouse Regulations (MOOWR) was restructured in 2019 under Section 65 of the Customs Act. It allows manufacturers to import capital goods and raw materials without upfront customs duty payment.

It is increasingly preferred by domestic-focused manufacturers.

Key Features of MOOWR

• Deferred payment of customs duty
• No export obligation
• No interest on deferred duty (if compliant)
• Applicable for domestic and export sales
• Valid as long as warehouse license continues

Compliance Requirements

• Customs bonded warehouse license
• Digital inventory management
• Monthly returns to Customs
• Controlled storage and manufacturing under supervision

Business Relevance

For companies importing machinery worth ₹10–50 crore, MOOWR significantly improves working capital efficiency.

What is EPCG Scheme?

The Export Promotion Capital Goods (EPCG) Scheme, governed under the Foreign Trade Policy (FTP 2023–28), allows zero customs duty import of capital goods.

However, it comes with strict export obligations.

Key Features of EPCG

• 0% Basic Customs Duty on capital goods
• Mandatory export obligation (6 times duty saved)
• Export obligation period: 6 years
• Annual reporting to DGFT

Compliance Requirements

• DGFT authorization
• Export tracking and certification
• Chartered Accountant compliance filings
• Bank guarantee in certain cases

Risk Exposure

Failure to meet export obligation results in:

• Duty recovery
• Interest liability
• Penalty under FTDR Act
• Risk to Import Export Code (IEC)

Financial Comparison Table – MOOWR vs EPCG

Let’s assume machinery import value: ₹15 crore
Basic Customs Duty: 10%
IGST: 18%

Particular	Normal Import	MOOWR	EPCG
Basic Customs Duty	₹1.5 crore	Deferred	0
IGST	₹2.7 crore	Payable on clearance	Payable
Export Obligation	No	No	6x duty saved (₹9 crore approx.)
Compliance Risk	Low	Moderate	High
Working Capital Impact	High strain	Improved liquidity	Moderate

Interpretation:
MOOWR improves liquidity immediately. EPCG eliminates duty but imposes export pressure worth multiple times the benefit.

Export Obligation Structure Under EPCG

Under FTP 2023–28:

Component	Requirement
Export Multiplier	6 times duty saved
Fulfilment Period	6 years
Average Export Obligation	Must maintain previous export average
Monitoring Authority	DGFT

For example:

If duty saved = ₹1.5 crore
Export obligation = ₹9 crore within 6 years

This equals ₹1.5 crore export annually on average.

Regulatory Authority Comparison

Scheme	Governing Authority	Legal Framework
MOOWR	Customs Department	Section 65, Customs Act
EPCG	DGFT	Foreign Trade Policy 2023–28

This means compliance nature differs — Customs-driven vs DGFT-driven.

Working Capital Impact Analysis

For capital-intensive industries:

• MOOWR reduces upfront capital blockage.
• EPCG reduces overall cost but ties growth to export performance.
• Domestic-focused MSMEs often struggle with EPCG commitments.

Companies planning capacity expansion but uncertain export orders generally prefer MOOWR.

Mini Business Story

A textile exporter in Ludhiana opted for EPCG in 2022 expecting export growth.

Due to global slowdown and geopolitical tensions, export orders dropped 30%.

They fell short of export obligation by ₹2 crore.

Result:

• Duty recovery notice
• Interest calculation
• DGFT compliance scrutiny
• Banking pressure

Strategic scheme selection could have avoided this exposure.

When MOOWR Makes More Sense

MOOWR is ideal if:

• You primarily serve domestic markets
• Export volumes fluctuate
• Machinery investment is large
• Cash flow flexibility is important
• You want long-term manufacturing stability

Industries benefiting:

• Auto components
• Electronics
• Food processing
• Renewable energy equipment

When EPCG Makes More Sense

EPCG is suitable if:

• You have confirmed export pipeline
• Long-term global contracts exist
• Export growth is stable
• You have strong compliance infrastructure

Industries benefiting:

• Engineering exports
• Textile exporters
• Pharma manufacturers

Compliance Risks & Penalties

Ignoring compliance requirements can lead to:

• Customs audit
• DGFT show cause notice
• Interest liability
• Duty recovery
• Suspension of import benefits

Choosing the wrong scheme increases operational risk.

Decision Matrix – MOOWR vs EPCG

Business Scenario	Recommended Scheme
Domestic market focus	MOOWR
High-value machinery import	MOOWR
Confirmed export contracts	EPCG
Aggressive export growth plan	EPCG
Working capital constraints	MOOWR

Conclusion: MOOWR vs EPCG — Strategic Choice Matters

Choosing between MOOWR vs EPCG is not about which scheme saves more duty.

It’s about:

• Risk tolerance
• Export predictability
• Cash flow planning
• Compliance capability

MOOWR provides flexibility and working capital advantage.
EPCG offers permanent duty exemption but demands export performance.

Early regulatory planning prevents costly mistakes later.

Need Expert Guidance?

Green Permits helps manufacturers:

• Evaluate eligibility
• Calculate financial impact
• Handle DGFT & Customs documentation
• Manage compliance reporting

📞 +91 78350 06182
📧 wecare@greenpermits.in

Book a Consultation with Green Permits