Finance ministry may review MOOWR benefits for battery storage imports

The Finance Ministry is convening discussions to review the application of the MOOWR (Manufacture and Other Operations in Warehouse Regulations) scheme to im...

What Happened

The Finance Ministry is convening discussions to review the application of the MOOWR (Manufacture and Other Operations in Warehouse Regulations) scheme to imported battery storage systems, following concerns from industry groups.
Domestic battery manufacturers and industry associations have argued that importers using the MOOWR route receive an effective customs duty advantage over companies manufacturing batteries in India without the bonded warehouse benefit, creating an uneven competitive playing field.
The review is taking place in the context of India's push to build domestic battery manufacturing capacity through the Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) battery storage — a scheme that requires significant domestic value addition.
A key policy question is whether duty deferment under MOOWR, originally designed to support domestic manufacturing, is inadvertently being used to import finished or near-finished battery storage systems without equivalent local value addition.
The outcome of the review will have direct implications for India's 500 GW renewable energy target by 2030, since grid-scale battery energy storage systems (BESS) are critical for managing intermittency in solar and wind generation.

Static Topic Bridges

MOOWR Scheme — Manufacture and Other Operations in Warehouse Regulations

MOOWR is a customs warehousing scheme introduced by the Central Board of Indirect Taxes and Customs (CBIC) in 2019 under the Customs Act, 1962, and operationalised through a licensing mechanism for bonded manufacturing facilities. It allows companies to import raw materials, components, and capital goods into a customs-bonded warehouse without paying upfront customs duty or Integrated Goods and Services Tax (IGST). Duty is deferred and becomes payable only if the goods are cleared for domestic consumption; exports from the bonded facility attract zero customs liability.

Legal basis: Customs Act, 1962; MOOWR regulations notified by CBIC in 2019
Operations permitted: manufacturing, assembly, re-labelling, re-packing, grading, sorting, testing, repair
Clearance options: domestic consumption (duty + IGST on depreciated value), export (duty-free), or inter-bonded transfer
Capital goods: imported under MOOWR without upfront duty; duty payable on depreciated value if cleared domestically
No export performance threshold or Net Foreign Exchange (NFE) requirement — unlike older Export Oriented Unit (EOU) schemes
Monthly compliance: firms must submit production and stock statements via the ICEGATE portal by the 10th of each month

Connection to this news: Battery storage system importers are reportedly using MOOWR to bring in systems with minimal domestic value addition, deferring customs duties indefinitely if batteries are eventually installed as part of power infrastructure (not "cleared for home consumption" in the traditional sense). This structural gap is what the Finance Ministry review seeks to address.

PLI Scheme for Advanced Chemistry Cell (ACC) Battery Storage

The National Programme on Advanced Chemistry Cell (ACC) Battery Storage was approved by the Union Cabinet on 12 May 2021 with a total budgetary outlay of ₹18,100 crore. It is administered by the Ministry of Heavy Industries and targets the creation of 50 GWh of ACC manufacturing capacity in India, with an additional 5 GWh for niche ACC technologies.

Approved: 12 May 2021; outlay: ₹18,100 crore
Target capacity: 50 GWh (ACC) + 5 GWh (niche) = 55 GWh total
Incentive disbursed over 5 years on actual sale of India-manufactured batteries
Domestic value addition requirement: minimum 25% initially, rising to 60% within 5 years
Technology-agnostic design: beneficiaries choose from lithium-ion, sodium-ion, flow batteries, etc.
Selected beneficiaries include Reliance New Energy Solar Ltd, Ola Electric, Hyundai Global Motors, and Rajesh Exports; Reliance Industries awarded an additional 10 GWh under QCBS
Commissioning timeline: manufacturing facilities must be set up within 2 years of signing programme agreements

Connection to this news: The PLI scheme demands that domestic manufacturers build local supply chains and value addition — a requirement that MOOWR-based importers bypass entirely. If MOOWR benefits remain available for battery storage systems without equivalent value-addition conditions, PLI beneficiaries face a structurally disadvantaged position, undermining the scheme's industrial policy rationale.

India's Energy Storage Targets and Grid-Scale Battery Demand

India's National Electricity Plan and the broader 500 GW non-fossil fuel capacity target by 2030 assume large-scale deployment of battery energy storage systems (BESS) to manage solar and wind intermittency. The Central Electricity Authority (CEA) has projected requirements of approximately 236 GWh of BESS by 2032. Meeting these targets at scale demands both cost-competitive imports in the short term and a robust domestic manufacturing base in the medium term.

India's 2030 renewable energy target: 500 GW installed capacity (non-fossil)
CEA projected BESS requirement: ~236 GWh by 2032
Battery costs: global lithium-ion battery pack prices fell below $100/kWh in 2024 for the first time, making storage increasingly viable
India's domestic ACC production currently negligible; PLI capacity is in commissioning phases
Imports of BESS have been growing rapidly as solar and wind project developers seek storage solutions

Connection to this news: The tension between short-term cost competitiveness (supported by duty deferment under MOOWR) and long-term domestic manufacturing (supported by PLI) is central to the policy review. The Finance Ministry must balance both imperatives without stalling India's renewable energy deployment timelines.

Customs Warehousing Policy — Bonded Manufacturing vs. Import Substitution

India's customs policy framework includes several overlapping schemes for duty management: Export Oriented Units (EOUs), Special Economic Zones (SEZs), Advance Authorisation, and MOOWR. MOOWR was designed as a more flexible, domestically-oriented alternative to EOUs, without the geographic and export-obligation constraints. However, its "no NFE requirement" feature means it can be used by entities with no net export orientation, distinguishing it from SEZ and EOU frameworks where export performance is monitored.

Customs Act, 1962: primary legislation for warehousing provisions (Sections 57–73A)
MOOWR vs. SEZ: MOOWR units are in the Domestic Tariff Area (DTA) geographically; SEZs are deemed foreign territory for customs purposes
MOOWR vs. EOU: EOUs require export performance norms; MOOWR does not
The absence of a domestic value addition floor or export obligation in MOOWR creates a potential for misuse in sectors (like batteries) where the policy intent is to build domestic manufacturing

Connection to this news: The Finance Ministry review may result in sector-specific carve-outs or conditions for MOOWR eligibility in battery storage — for instance, a minimum domestic value addition threshold — to align the scheme with industrial policy goals without dismantling its core flexibility.

Key Facts & Data

MOOWR introduced by CBIC: 2019; under Customs Act, 1962
PLI ACC scheme: approved 12 May 2021; outlay ₹18,100 crore; target 50 GWh + 5 GWh
PLI domestic value addition: 25% (initial) rising to 60% (within 5 years)
PLI selected companies: Reliance New Energy, Ola Electric, Hyundai Global Motors, Rajesh Exports; Reliance Industries (10 GWh additional)
CEA projected BESS requirement: ~236 GWh by 2032
India's renewable energy target: 500 GW non-fossil by 2030
Global lithium-ion battery pack cost: fell below $100/kWh in 2024
MOOWR: no export performance threshold; duty deferred until domestic clearance
Customs Act warehousing provisions: Sections 57–73A