Scheme Comparison
MOOWR Scheme vs Export Oriented Unit (EOU) Scheme
EOUs were the workhorse of India's export-led manufacturing for three decades, but the duty-deferment economics have flipped since 2019. Here's how the MOOWR Scheme under Section 65 of the Customs Act compares to a fresh EOU registration today.
Side-by-side: MOOWR vs EOU
| Criterion | MOOWR | EOU |
|---|---|---|
| Governing law | Section 65, Customs Act, 1962 + MOOWR Regulations, 2019 | Foreign Trade Policy (FTP) — EOU chapter |
| Export obligation | None — sell anywhere in India or export | Positive Net Foreign Exchange (NFE) over 5 years |
| BCD on imports | Deferred indefinitely; extinguished on export of FG (inputs) / on continued in-unit use (capital goods) | Exempt up-front (subject to NFE) |
| IGST on imports | Deferred until DTA clearance; no interest | Exempt; reversal on DTA sale |
| Anti-Dumping / Safeguard | Deferred; extinguished on export of FG | Exempt subject to conditions |
| DTA sales | Permitted freely; pay duty on import value at time of clearance | Permitted with restrictions; full duty + concessional structure |
| GST refunds | Standard refund mechanism applies | Refund mechanism with NFE conditions |
| Bonding / warehouse status | Entire factory is a Customs bonded warehouse | Designated EOU premises |
| Approval timeline | 30–60 days typical | 60–90 days; LoP from Development Commissioner |
| Exit / de-bonding | Surrender licence; pay duty on goods then in stock and on capital goods at original CIF value, with no interest | Pay duty on capital goods at depreciated value + NFE shortfall penalties |
| Best fit | Domestic + export hybrid; capital-intensive imports | Pure-export manufacturers with strong NFE |
When MOOWR is the right answer
- You serve both domestic and export markets — or expect domestic share to grow.
- Capital-equipment imports are large; you want indefinite BCD + IGST deferment.
- You want to avoid NFE tracking, periodic LUT renewals, and Development Commissioner approvals.
- You want a faster, lighter exit if business mix changes.
When EOU may still win
- You will export ≥80% of output and have committed buyers.
- You need an established scheme for foreign collaborators familiar with EOU.
- Your products attract specific FTP-linked benefits unavailable under MOOWR.
FAQs
Can an existing EOU convert to MOOWR?+
Yes. An EOU can de-bond and apply for a Section 65 licence over the same premises. The transition requires settling depreciated duty on capital goods and a fresh MOOWR application — typically structured to keep operations uninterrupted.
Is GST treatment identical under both?+
No. MOOWR follows standard GST refund procedures with no NFE linkage. EOUs have specific GST refund mechanics tied to export performance.
Which is better for a greenfield electronics plant?+
MOOWR is usually superior when domestic demand exists, because BCD + IGST on capital equipment is deferred indefinitely without an export commitment.
Does MOOWR charge interest on the deferred duty?+
No. MOOWR carries no interest liability whatsoever on deferred customs duty — neither on inputs nor on capital goods, regardless of how long the goods remain warehoused. EOU has no interest on the duty either, but is conditioned on NFE.
How is capital-goods duty quantified if a MOOWR unit eventually removes the machinery?+
Duty is computed on the original CIF value of the capital goods at the time of import, with no depreciation adjustment and no interest — even if the asset has been in the MOOWR unit for many years.
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