MOOWR Scheme in 2026: How Manufacturers Defer Customs Duty, Who Qualifies, and When It Pays

A new CNC line from Germany or a moulding machine from Japan can carry customs duty of 15 to 30% of its value, payable before the machine is even unpacked. For an MSME, that duty often costs more than the first year's interest on the machine loan. The MOOWR scheme lets you keep that money in the business. Duty on imported machinery and inputs is deferred, without interest, until goods leave your plant for the Indian market, and it is never paid on what you export.

Most manufacturers have heard of MOOWR. Far fewer know whether it suits their unit, and much of what circulates online is out of date. Some articles still say applications must be filed physically; they have been online on ICEGATE 2.0 since November 2025. This guide explains how MOOWR works, who is eligible, how to apply, and how to judge whether the savings justify the compliance.

Based on Section 65 of the Customs Act, 1962, the Manufacture and Other Operations in Warehouse Regulations, 2019, the Private Warehouse Licensing Regulations, 2016, and CBIC Circular No. 28/2025-Customs dated 15 November 2025. Updated November 2026.

What the MOOWR scheme is, in plain terms

MOOWR stands for Manufacture and Other Operations in Warehouse Regulations, 2019. It works on two approvals from Customs:

1. A Section 58 licence, which makes your factory, or a demarcated part of it, a private bonded warehouse.

2. A Section 65 permission, which allows manufacturing and other operations on the goods kept in that bonded area.

Imported goods move from the port to your plant under an into-bond bill of entry, without paying duty. You use them in production. Duty becomes payable only when the goods, or the products made from them, are cleared into the Indian market. If the finished goods are exported, the duty on imported inputs is never paid.

The scheme applies to capital goods as well as raw materials, components and consumables. Domestic inputs can be brought into the bonded area too.

How the MOOWR scheme works: duty is deferred from import until domestic clearance, and never paid on exported output.

The benefits that matter to a manufacturer

Cash flow

• Duty deferred on capital goods and inputs. Duty on imported machinery is paid only if and when the machine is cleared to the domestic market. For a new plant or an expansion, this is often the largest single cash saving.

• IGST and compensation cess deferred too, for now. The Finance Act, 2023 inserted Section 65A to exclude IGST and cess from deferment, but it had not been notified as of late 2026.

• No interest on deferred duty, as long as the goods are used in Section 65 operations. Goods cleared "as such", without any operation, still attract interest under Section 61(2).

• No duty on exports. Imported inputs that go out in exported products never bear customs duty, with no drawback claim or refund to chase.

Flexibility

• No export obligation. You can sell 100% of output in India; duty on the imported content is paid when goods are cleared. Advance Authorisation, EPCG, EOU and SEZ all carry export obligations.

• No time limit for keeping imported goods in the bonded area, as long as they are used in manufacture.

• No location restriction and no minimum investment. An existing factory anywhere in India can be converted.

• Can be combined with IGCR concessional rates (Circular 26/2024-Customs), so lower-rate duty is also deferred.

Compliance

• One-time licence with no renewal.

• No Customs officer posted at the plant. Control is through digital records, monthly returns and risk-based audits.

Who is eligible for the MOOWR scheme

MOOWR is open to anyone who holds a Section 58 private warehouse licence, or who applies for that licence and the Section 65 permission together. A new unit does not need a licence first.

The applicant must meet the Private Warehouse Licensing Regulations, 2016:

• Constitution. An Indian citizen or an entity registered in India: proprietorship, partnership, LLP or company.

• Solvency certificate from a scheduled bank, equal to the maximum duty on goods stored in the bonded area at any one time.

• Clean record. The licence can be refused if bankruptcy or criminal proceedings are pending, or if the promoters have been penalised under Customs law.

• Suitable premises, secure enough for dutiable goods and open to supervision by Customs, with the bonded area clearly marked on the layout.

• A real operation. The unit must manufacture or carry out other operations on the goods. Pure storage for trading does not get MOOWR benefits.

Since 2024, the government also has power to exclude specified operations from MOOWR, so check that your process is not excluded before you apply.

How to apply: ICEGATE 2.0, not paper

Applications are filed online. In July 2025, Circular 18/2025 briefly told applicants to file physically with the Commissioner, but it was withdrawn the next day. The Invest India portal stayed open until 15 November 2025. Since then, Circular 28/2025-Customs has moved filing to a dedicated module on ICEGATE 2.0.

1. Register on ICEGATE with the role "Warehouse Licensee", using your IEC and GSTIN.

2. Find your port code. Each Chief Commissioner issues a Public Notice naming the port code for applications in that jurisdiction.

3. File one combined application for the Section 58 licence and Section 65 permission, with the site plan, layout, solvency certificate and supporting documents.

4. Answer queries raised by the officer within the module.

5. Physical verification of the premises by Customs.

6. Execute the bond and insurance: a triple-duty bond under Section 59, all-risk insurance covering the duty, and an indemnity bond.

7. Licence and permission issued. Imports can then come in under into-bond bills of entry.

Budget for the process to take time. Most delays come from insurance, bond formats and officer queries, not from eligibility.

The seven steps of a MOOWR application on ICEGATE 2.0, fully online since 15 November 2025.

A worked illustration

Take an auto-component maker in Nashik importing a press line with an assessable value of ₹5 crore. Assume basic customs duty (BCD) of 7.5%, Social Welfare Surcharge of 10% on BCD, and IGST of 18%. Actual rates depend on the tariff heading.

Duty	Rate	Amount (₹ lakh)
BCD	7.5% of ₹500 lakh	37.50
Social Welfare Surcharge	10% of BCD	3.75
IGST	18% of ₹541.25 lakh	97.43
Total payable at import	138.68

Without MOOWR, about ₹1.39 crore goes out at the port. BCD and surcharge of ₹41.25 lakh are a permanent cost. The IGST can be claimed as input tax credit, but the cash stays blocked until the credit is used.

Under MOOWR, none of this is paid at import. The press line sits in the bonded area and duty falls due only if the machine itself is later cleared into India. Selling its output in the domestic market does not trigger duty on the machine. At a 10% cost of funds, deferring ₹1.39 crore is worth roughly ₹14 lakh a year.

Duty paid at import on a ₹5 crore press line: ₹138.68 lakh without MOOWR, nil under MOOWR (illustrative rates).

Now add imported steel of ₹2 crore a year, with 40% of output exported. Duty on the exported 40% is never paid. Duty on the domestic 60% is paid only when finished parts are cleared, typically weeks or months after import.

Set these savings against the yearly cost of all-risk insurance, the bond, bonded-area segregation and record-keeping. For most units with heavy machinery imports, MOOWR comes out clearly ahead. For small, occasional imports, it often does not.

MOOWR, EMI or normal import?

Since 1 April 2026 there is a lighter option: the Eligible Manufacturer Importer (EMI) scheme. A compliant manufacturer can pay duty by the first day of the following month, with no bond, licence or warehouse.

Feature	Normal import	EMI scheme	MOOWR
When duty is paid	At import	By the 1st of next month	On clearance to the domestic market
Duty on capital goods	At import	Short deferral only	Not paid while the machine stays in the bonded area
Duty on exported output	Paid, then drawback	Paid, then drawback	Never paid
Licence or bond	None	None	Section 58 licence, Section 65 permission, bond, insurance
Bonded area	No	No	Yes
Ongoing compliance	Standard	Light	Digital records, monthly returns, audits
Best for	Small or occasional imports	Regular imports needing short-term cash relief	Heavy capex imports, exporters, long input holding

Who should opt in, and who should not

Strong candidates

• Greenfield or expansion projects with large imported machinery: auto components, electronics, solar, batteries, pharma and chemicals.

• Manufacturers selling both in India and abroad who don't want an export obligation.

• Exporters tired of the drawback and IGST refund cycle.

• Units that hold imported inputs for long periods before use.

Weak candidates

• Units with small or occasional imports, where insurance and compliance cost more than the saving.

• Pure traders, since storage alone does not qualify.

• Units that cannot keep item-level digital records of every bonded receipt, issue and clearance.

• Businesses with frequent changes in premises, where the bonded area would keep moving.

Common mistakes we see

• Relying on old guidance and preparing a physical file when the application is online on ICEGATE 2.0.

• Importing machinery before the licence and permission are in place, and paying full duty on it.

• An insurance policy that does not cover the full deferred duty, or is not in the form Customs requires.

• A layout that does not clearly separate bonded and non-bonded areas.

• Clearing goods "as such" without any operation, and then facing interest under Section 61(2).

• Inventory records that cannot trace each imported item from bill of entry to consumption, export or clearance.

• Missing monthly returns, which is the quickest way to draw a show cause notice.

• Exporting machinery at a token price to avoid duty. The export value must be genuine for Customs and FEMA, and a nominal price invites valuation and evasion proceedings.

Changes to watch

• Draft Warehouse Licensing Regulations, 2026. Released by CBIC for consultation in August 2026, they would replace the three 2016 licensing regulations. Proposed changes include CCTV, intrusion alarms, round-the-clock security and a fire safety certificate; quarterly stock verification; and an annual audit of inventory records. Existing licensees would get three months to comply. As of this update, they are still in draft.

• Section 65A. If notified, IGST and compensation cess would no longer be deferred, which would reduce the cash benefit for domestic sellers.

We will update this guide when either change is notified.

Documents to keep ready

• IEC, GSTIN, PAN and entity documents (incorporation or partnership deed)

• Ownership or lease documents for the premises

• Site plan and layout showing the bonded area, entry and exit points and storage

• Solvency certificate from a scheduled bank

• List of goods proposed for import, with tariff headings and estimated duty

• Description of the manufacturing process or other operations

• Details of the inventory and accounting software for bonded goods

• Draft insurance policy, Section 59 bond and indemnity bond

• Authorised signatory and warehouse keeper details

• Latest audited financial statements

How DP Jadhav & Co. can help

We help manufacturers decide whether MOOWR suits them and run it well once approved: a cost-benefit study against EMI and normal import, the ICEGATE application and documentation, bonded inventory records, monthly returns, and periodic stock reconciliation.

Planning to import machinery or inputs? Write to contact@dpjadhav.com or call 9860804684 for a preliminary MOOWR feasibility review.

Also read: Frequently Asked Questions on MOOWR Scheme and Change of Warehouse Keeper under MOOWR Scheme

Disclaimer: This article summarises the MOOWR framework under the Customs Act, 1962 and related regulations and circulars as of November 2026, for general information. Rates, notifications and Customs practice change, and approvals are decided by the jurisdictional Commissioner case by case. Refer to the official CBIC circulars and take professional advice before making import or investment decisions.