Both schemes let a manufacturer import inputs without paying customs duty if the finished goods are exported. That is where the similarity ends. MOOWR defers the duty and turns part of your premises into a customs bonded warehouse. Advance Authorisation exempts the duty against a licence-wise export promise. They differ on the export incentives you keep, the security you give, what happens if you sell in India, and how often a customs officer visits. On the same set of numbers, one can be worth twice the other.
For a business that exports all or almost all of its output, Advance Authorisation usually saves more than MOOWR, because RoDTEP remains available on Advance Authorisation exports and the premises do not have to be bonded. MOOWR is the better choice when you also sell the product in India, when input-output norms cannot be fixed, or when you want no export obligation at all, but every product made in a MOOWR warehouse loses RoDTEP and All Industry Rate drawback. In both cases, count only basic customs duty, social welfare surcharge and anti-dumping duty as the saving. IGST on imports is creditable and is not a saving.
What each scheme actually saves
The first mistake in most comparisons is to count IGST on imports as a saving. It is not: IGST paid at the port is available as input tax credit, and for an exporter it comes back through the GST refund. The real saving is the duty that is otherwise a cost.
| Duty on imported inputs | MOOWR | Advance Authorisation |
|---|---|---|
| Basic customs duty | Deferred; not payable on goods exported | Exempt |
| Social welfare surcharge | Deferred; not payable on goods exported | Exempt |
| Anti-dumping and safeguard duty | Deferred; not payable on goods exported | Exempt (FTP 2023, para 4.14), except on certain deemed-export supplies under para 7.02 |
| IGST and compensation cess | Deferred today. Section 65A, enacted in 2023 but not yet in force, would make them payable upfront | Exempt, subject to the actual user condition |
On the duty side the two schemes are equivalent for goods that are exported. The comparison is decided by everything else.
MOOWR vs Advance Authorisation, side by side
| MOOWR | Advance Authorisation | |
|---|---|---|
| Legal basis | Sections 58 and 65, Customs Act, 1962; MOOWR (No. 2) Regulations, 2019; Circular 34/2019-Customs | Chapter 4, Foreign Trade Policy 2023 and Handbook of Procedures; customs exemption notification |
| Who grants it | Jurisdictional Principal Commissioner or Commissioner of Customs | DGFT Regional Authority, then registered at the port |
| Nature of relief | Deferment, remitted on export | Exemption, conditional on export obligation |
| Export obligation | None | Licence-wise; 18 months from issue |
| Value addition | None required | Minimum 15% |
| Input-output norms | Self-declared bill of materials | SION, or self-declared norms ratified by the Norms Committee |
| Validity | No expiry; continues until surrendered or cancelled | Per authorisation; imports within 12 months |
| Security | Bond for three times the duty; bank guarantee normally nil | Bond, plus a bank guarantee unless exempt as a status holder or on past performance |
| Selling in India | Allowed on payment of the deferred duty, with no interest | A breach: duty plus interest at 15%, and possible penalty |
| RoDTEP | Not available on goods made in the warehouse | Available at Appendix 4RE rates while notified (currently to 31 December 2026) |
| AIR drawback | Not available | Not available at All Industry Rates; brand rate possible on duty-paid inputs outside the norms |
| Premises | Bonded, demarcated area, signage, warehouse keeper | No change |
| Job work | Imported goods must first reach the bonded premises (Circular 48/2020-Customs) | Supporting manufacturer endorsed on the licence; goods can go direct |
| Returns | Monthly return within 10 days of month end, including nil months | Export obligation tracking and EODC application |
| Customs visits | Site verification before grant, stock checks on demand, post-clearance audit | No premises inspection as a rule |
The incentive trade-off nobody mentions
The MOOWR pitch usually stops at "no duty, no obligation, no bank guarantee". What it leaves out is that the RoDTEP scheme lists goods manufactured or exported in or from a warehouse under Section 65 as ineligible, and the All Industry Rates of drawback do not apply to such goods either. The restriction attaches to the product. If a finished board uses one bonded component, the whole board loses RoDTEP.
For a business that receives meaningful RoDTEP and drawback today, that loss can absorb a large share of the duty saved. Retaining incentives under MOOWR would need a fully separate duty-paid production stream, with separate inputs, batches, processing and shipping bills, and any commingling exposes the whole export book. Advance Authorisation also gives up All Industry Rate drawback, but keeps RoDTEP and allows a brand rate on duty-paid inputs outside the norms.
A worked example
A Mumbai electronics hardware company imports printed circuit boards, radio modules and components worth about ₹7 crore a year, has the boards assembled by a job worker, and exports everything. From a line-by-line review of one year's bills of entry:
| Annual figures | Today | MOOWR | Advance Authorisation |
|---|---|---|---|
| BCD, SWS and anti-dumping duty saved | – | ₹40 lakh | ₹40 lakh |
| Drawback received | ₹12 lakh | Lost | Lost (brand rate possible on duty-paid inputs) |
| RoDTEP received | ₹7 lakh | Lost | ₹7 lakh, while notified |
| Gross benefit compared with today | Base | +₹21 lakh | +₹28 lakh |
| Annual compliance and running cost | – | ₹4 to 8 lakh | ₹2 to 4 lakh |
| Net annual benefit | Base | About ₹13 to 17 lakh | About ₹24 to 26 lakh |
IGST of about ₹1.3 crore on the same imports was excluded because it is credited back. More than four-fifths of the duty pool sat in two items: a radio module declared under three different tariff headings across bills of entry, and 30% anti-dumping duty on bare PCBs that applies only to non-listed Chinese producers. A classification opinion and a supplier review addressed more than ₹25 lakh with no scheme, no bond and no loss of incentives. The recommendation was to fix those first, then start a single Advance Authorisation on the two high-duty inputs and run it through to EODC before scaling.
When MOOWR is the better choice
- You sell in India as well as abroad, or your export share is uncertain. MOOWR lets you clear goods domestically on payment of duty without interest, with no breach.
- Your RoDTEP and drawback are small relative to the duty on imports, so the incentive loss does not matter much.
- Norms cannot be fixed. Products with frequent design changes, many inputs, or no SION, where Norms Committee ratification would be slow.
- You import capital goods and want them duty-deferred without an EPCG export obligation.
- You cannot give a bank guarantee and do not qualify for the Advance Authorisation exemptions.
- You want a permanent arrangement rather than a cycle of licences, applications and redemptions.
When Advance Authorisation is the better choice
- You export all or almost all of your output and comfortably clear 15% value addition.
- You receive meaningful RoDTEP that you would lose under MOOWR.
- Your manufacturing is outsourced to a job worker, so the extra logistics leg through bonded premises would add real cost.
- You are a status holder or have a clean export record, so the bank guarantee falls away.
- You do not want customs control of your premises, monthly returns and periodic audits.
Before you choose either
Three checks are cheaper than either scheme and often change the answer:
- Tariff classification.The same part declared under different headings across bills of entry is a demand waiting to happen, and the correct heading may carry a lower rate.
- Anti-dumping duty by producer.Many anti-dumping notifications fix rates producer by producer, with lower or nil rates for named manufacturers. Sourcing the same goods from a listed producer can remove the duty outright.
- Preferential origin.Imports from countries with which India has a trade agreement may qualify for concessional duty with a valid certificate of origin.
Then model the remaining duty against your actual incentive credits, not estimates. Our MOOWR registration guide and Advance Authorisation guide set out what each involves, and our export incentives service covers how we run the study.
Frequently Asked Questions
It depends on whether you sell in India and how much RoDTEP and drawback you receive. For a fully export-oriented business, Advance Authorisation usually gives the better net result because RoDTEP remains available and the premises do not need to be bonded. MOOWR is better for businesses with domestic sales, unworkable input-output norms, or no appetite for an export obligation.
No. The RoDTEP scheme lists goods manufactured or exported in or from a warehouse under Section 65 of the Customs Act as ineligible. The restriction applies to the whole product, so an export that uses even part of its inputs from a MOOWR warehouse loses RoDTEP.
Yes, while the scheme is notified for such exports. DGFT Notification 41/2026-27 extends RoDTEP for Advance Authorisation, EOU and SEZ exports, at the Appendix 4RE rates, up to 31 December 2026. Check the notification in force on the date of export.
Normally not. The security under MOOWR is a bond for three times the duty under Section 59 of the Customs Act, together with an all-risk insurance policy on the warehoused goods. The prescribed bank guarantee for Section 65 units is nil, although the proper officer can ask for additional security in specific cases.
Not on the same goods, but a business can run both on different products or input streams if its inventory and records keep them completely separate. In practice running two regimes in one accounting system is error-prone, and we recommend it only where the volumes justify it.
Yes, for goods that are exported. Under MOOWR the anti-dumping duty is deferred and never paid on the exported content. Under Advance Authorisation, inputs are exempt from anti-dumping, countervailing and safeguard duty under para 4.14 of the Foreign Trade Policy 2023, except for certain deemed-export supplies.
Sources and law referred to
- Authority: CBIC. Title: Customs Act, 1962, sections 58, 59, 61, 65 and 65A; MOOWR (No. 2) Regulations, 2019, Notification 69/2019-Customs (N.T.); Circular 34/2019-Customs dated 1 October 2019; Circular 48/2020-Customs. View Source. Accessed: November 2026.
- Authority: Directorate General of Foreign Trade. Title: Foreign Trade Policy 2023, Chapter 4 (paras 4.03, 4.14); Handbook of Procedures 2023; RoDTEP Appendix 4R and 4RE; Notification 41/2026-27. View Source. Accessed: November 2026.
- Authority: CBIC. Title: Circular 58/2004-Customs on bank guarantee norms for export promotion schemes. View Source. Accessed: November 2026.
Positions are as read on November 4, 2026. Export incentives are notified for fixed periods and change often; confirm the notification in force on the date of your shipment or filing. This article is general information, not advice on your facts.
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Written by CA Karan Shah
Founder of KC Shah & Associates, Chartered Accountants, Andheri East, Mumbai (ICAI Membership No. 190724). Advises manufacturers and exporters on MOOWR, Advance Authorisation, RoDTEP and drawback, and GST export refunds, alongside GST compliance and outsourced accounting in Tally and Zoho Books.