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
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.
