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India offers various trade regulations aimed at promoting manufacturing, exports, and overall business growth. In this blog post, we will provide an overview of three key regulations – Manufacture and Other Operations in Warehouse Regulations 2019 (MOOWR), Advance License Authorisation (ALA), and Export Promotion Capital Goods (EPCG) – and compare their features to help you understand which may be suitable for your business.
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Manufacture and Other Operations in Warehouse Regulations 2019 (MOOWR):
MOOWR is designed to promote manufacturing and other operations within bonded warehouses in India. Under this regulation, businesses can import raw materials, components, and capital goods without paying customs duty upfront. The customs duty payment is deferred until the finished products leave the warehouse. MOOWR offers a single-window approval process, unlimited warehousing period, and no export obligation, allowing businesses to sell goods in both domestic and international markets.
Advance License Authorisation (ALA):
ALA facilitates the duty-free import of inputs required for export production. Businesses can obtain an Advance License to import raw materials, components, and consumables without paying customs duty, provided they fulfill a specific export obligation within a given period. This scheme encourages businesses to produce goods for export, contributing to India’s overall export growth.
Export Promotion Capital Goods (EPCG):
EPCG encourages the import of capital goods for export production by offering reduced or exempted customs duties. Under this scheme, businesses can import capital goods such as machinery, equipment, and tools at lower customs duty rates, provided they meet a specified export obligation within a given period. EPCG aims to boost India’s export competitiveness by encouraging businesses to invest in modern and efficient capital goods.
Comparison:
To better understand the differences between MOOWR, ALA, and EPCG, refer to the comparison table provided below:
| Features | MOOWR | ALA | EPCG |
|---|---|---|---|
| Objective | Promote manufacturing and other operations in bonded warehouses. | Facilitate duty-free import of inputs for export production. | Encourage import of capital goods for export production. |
| Customs Duty Deferment/Exemption | Customs duties and GST are deferred until the finished goods leave the warehouse. | Customs duties and GST are exempted on imported inputs used for export production. | Reduced or exempted customs duties and GST on imported capital goods for export production. |
| Approval Process | Single-window approval process for setting up operations in a bonded warehouse. | Requires a separate application process for the license. | Requires a separate application process for the EPCG license. |
| Export Obligation | No export obligation. Goods can be sold in domestic or international markets. | Export obligation must be met within a specified period. | Export obligation must be met within a specified period. |
| Time Limit on Warehousing/Usage | Unlimited period for warehousing. | Time-bound for the usage of imported inputs and fulfilling export obligations. | Time-bound for the usage of imported capital goods and fulfilling export obligations. |
| Geographical Restrictions | No geographical restrictions. | No geographical restrictions. | No geographical restrictions. |
| Goods Covered | Allows various activities such as manufacturing, processing, packaging, and labeling. | Covers raw materials, components, and consumables used for export production. | Covers capital goods used for pre-production, production, and post-production of export goods. |
About Rohit Lohade
Rohit Lohade is a Chartered Accountant with 15+ years of experience. He has assisted more than 300 Gobal Companies with India Entry Strategy