How to Convert Your Existing Factory into a MOOWR-Approved Unit

Introduction — The Cash Flow Bottleneck Every Manufacturer Feels

When a Pune-based automotive components maker saw nearly ₹3 crore blocked in customs duties each quarter, owner Ramesh Iyer felt the pressure every manufacturer knows too well. His imported parts sat in storage, fully paid for in duty, while production cycles slowed and working capital shrank. Then he discovered the MOOWR Scheme — a policy that quietly transforms factories into bonded manufacturing warehouses, allowing duties to be paid only when goods are actually sold or cleared.

For hundreds of Indian producers, converting an existing facility under MOOWR has become a practical way to boost liquidity and efficiency. It’s not about red tape — it’s about building a smarter, leaner supply chain.

What Is the MOOWR Scheme and Why It Matters for Existing Factories

The Manufacture and Other Operations in Warehouse Regulations (MOOWR 2019) were introduced by the Central Board of Indirect Taxes and Customs (CBIC) to simplify imports for Indian manufacturers. Under this scheme, a company can import raw materials or capital goods without paying customs duty or IGST upfront. Those taxes are only due when the goods are cleared for home consumption; if they’re re-exported, no duty is ever paid.

For existing factories, this means the freedom to:

• Keep operations where they are instead of relocating to a special zone.
• Maintain domestic and export sales from one location.
• Improve cash flow by delaying tax payments.
• Avoid complicated export obligations attached to SEZs or EOUs.

MOOWR isn’t just a customs loophole — it’s a strategic framework that rewards operational discipline and good record-keeping.

Eligibility for MOOWR Conversion

Any manufacturing or assembly unit in India can apply for conversion as long as it has a clearly defined facility and transparent ownership. The customs authority mainly checks whether the site can be secured and audited easily.

Your factory should:

• Be legally owned or leased, with proper documentation.
• Have a clearly marked boundary and restricted entry to bonded zones.
• Maintain digital records of imported and locally sourced goods.
• Be equipped for safe storage, fire prevention, and customs inspection.

Even a portion of a factory can be notified as bonded — ideal for MSMEs wanting to pilot the scheme without converting their entire premises.

Step-by-Step Process to Convert Your Existing Factory into a MOOWR-Approved Unit

1. Conduct a Pre-Conversion Assessment

Before filling forms, take time to study your facility. Map out how goods move from gate to warehouse to production. Identify where imported materials are stored and how they’ll be tracked once bonded.

A short pre-audit by your internal team or consultant can confirm whether the layout, documentation, and infrastructure already meet customs expectations or if small upgrades — like CCTV coverage or designated stock areas — are needed. These small changes prevent last-minute objections during inspection.

2. Apply for a Bonded Warehouse Licence (Section 58)

This is the formal step where your site becomes legally recognised as a private bonded warehouse. The customs department reviews your application, site plan, and security arrangements.

Include clear layout drawings showing where bonded goods will be stored, along with ownership proof and undertakings that you’ll follow customs supervision norms. Once approved, the location is notified in the official gazette. From that point, imported goods can enter without immediate duty payment.

3. Apply for Manufacturing Permission (Section 65)

After the warehouse licence, apply for permission to carry out manufacturing or other operations inside it. This application describes your production process, raw materials, output products, and accounting method for each stage.

Customs uses this data to ensure traceability between imported inputs and finished goods. Providing realistic production ratios and transparent stock tracking systems makes approval smoother.

4. Install Control and Record Systems

Transparency is the backbone of MOOWR. Once permissions are in place, install a basic digital system — this could be an ERP module, a custom spreadsheet, or a simple inventory software — that records every import, movement, and clearance.

The idea isn’t heavy automation but visibility. Customs officers should be able to review digital ledgers on request and match them with physical stock. Many companies repurpose their existing GST or inventory platforms with small tweaks instead of starting from scratch.

5. Customs Inspection and Bond Execution

A Superintendent of Customs will visit the facility to verify boundaries, signage, locks, and records. After inspection, you sign a bond (Form B) that guarantees duty payment for any goods removed to the domestic market.

Most inspections are straightforward if the bonded area is clearly demarcated and security measures are in place. Keep the space clean and documents ready — it signals professionalism and builds confidence with local customs officials.

6. Start MOOWR Operations

Once the bond is executed, your unit officially operates under the MOOWR scheme. Imported raw materials and capital goods can arrive without duty; finished products can be exported directly or cleared domestically after paying deferred taxes.

This flexibility lets manufacturers serve both export and domestic customers seamlessly, using one integrated facility rather than juggling multiple registrations.

7. Maintain Monthly Returns and Records

Every month, submit a simple return to your jurisdictional Commissionerate detailing stock movement, duty liability, and production volumes. Most zones accept these digitally. Treat it as a monthly health check — consistent filing avoids scrutiny and keeps your operations audit-ready.

Conversion Timeline and Duties Comparison

Process Step	Typical Duration	Key Authority
Pre-audit and Documentation	1–2 weeks	Consultant / Company
Licence (Section 58) Approval	2–3 weeks	Jurisdictional Customs
Manufacturing Permission (Section 65)	1–2 weeks	CBIC Commissionerate
Inspection and Bond Execution	1 week	Superintendent of Customs
Total Conversion Time	4–6 weeks	—

In practice, well-prepared companies complete conversion within 30 to 45 days — faster than setting up an SEZ unit or EOU.

Duty Impact: Before vs After MOOWR Conversion

Particulars	Normal Import	Under MOOWR
Customs Duty on Raw Material	Paid immediately at port	Deferred until domestic sale
IGST on Import	Paid upfront	Deferred until clearance
Duty on Exported Goods	Not refundable	Fully waived
Working Capital Locked	100 % of duty value	Almost 0 until sale
Record Maintenance	Standard warehouse logs	Customs-auditable digital records

Manufacturers who import heavily often free up 15 – 25 % of working capital, giving them more liquidity for operations or expansion.

Key Compliance Requirements After Conversion

After approval, discipline matters more than paperwork. Maintain updated ledgers for imported and domestic materials, store CCTV footage for at least 30 days, and ensure bonded areas remain clearly marked.

Customs may conduct periodic verifications; if records and physical stock align, these visits are brief and uneventful. A transparent approach keeps relationships professional and renewals automatic.

Risks of Non-Compliance or Delay

Operating without MOOWR registration means paying duties upfront and missing out on a significant financial cushion. Some factories that delayed conversion faced retrospective duty demands or interest on deferred liabilities.

Penalties under the Customs Act can reach ₹2 lakh for record mismatches, but the real loss is operational — blocked capital, delayed shipments, and reputational risk during audits. Converting early avoids these pitfalls entirely.

Real-World Wins from Indian Manufacturers

• An electronics assembler in Chennai converted its 40,000-sq-ft facility under MOOWR in 2024 and now saves about ₹1.2 crore each year through duty deferment.
• A Pune auto-component firm finished conversion within five weeks and cut customs paperwork by 60 %.
• A Gujarat-based pharma manufacturer segregated its plant into bonded and non-bonded zones, boosting export output by 30 % within 12 months.

These are ordinary factories that turned policy into profit with minimal disruption.

Environmental and Local Compliance

Conversion usually doesn’t mean reconstruction, but authorities still expect updated environmental documentation. Check that your Pollution Control Board consents, fire safety certificates, and factory registrations reflect the bonded area.

If your process doesn’t increase emissions or waste, most SPCBs treat it as an administrative update rather than a new clearance. Preparing these documents early ensures customs approval flows smoothly.

Why Work with a Compliance Partner

The MOOWR process crosses several departments — customs, pollution boards, factory inspectors, and finance. Trying to coordinate all of them alone can stretch timelines and drain focus from production.

A specialist partner like Green Permits helps you:

• Prepare accurate documents and layouts.
• Liaise with customs officers during inspection.
• Align environmental and factory compliances.
• Maintain ongoing reporting after approval.

Think of it as outsourcing complexity so your team can focus on manufacturing, not chasing files.

Conclusion — Convert Once, Save for Years

Turning your existing factory into a MOOWR-approved unit is a one-time effort with long-term payoffs. It lightens the duty burden, speeds up clearances, and gives manufacturers the freedom to serve both domestic and export markets from a single site.

Every quarter that passes without conversion is lost liquidity. Starting the process now ensures that by the next financial year, your customs cycle is lighter and your cash flow stronger.

Contact Green Permits:
📞 +91 78350 06182  📧 wecare@greenpermits.in
Book a consultation today and let our team help you convert your facility smoothly under MOOWR.