Create a strong domestic MRO hub

Rajendra N Johri | Updated on January 20, 2018 Published on February 18, 2016

Rajendra N Johri

India, with its growing aircraft fleet size, strategic location advantage, rich pool of engineering expertise, and lower labour costs, has huge potential to be a global Maintenance Repair and Overhaul (MRO) hub.

At present, the airlines operating in India get nearly 90 per cent of their MRO done abroad, mainly due to cost advantages resulting from comparatively high tax burden, cumbersome operating procedures, and inadequate MRO service facilities available in the country.

India’s current MRO market size is estimated to be around $800 million. According to Boeing, the market is expected to grow at 7 per cent CAGR for the next seven years to reach $1.2 billion. With the fleet size likely to double by 2020, the need for a strong domestic MRO industry is critical and not just desirable.

The industry is hoping that the Budget will take forward what is given in the New Civil Aviation Policy 2016 to make India an attractive MRO hub in this part of the world.

The industry hopes the Budget will provide relief by zero-rating the service tax imposed on the MRO industry for at least the next 10 years, especially considering that when this job is carried out abroad, the airlines do not pay any tax. Further, providing SEZ status to MRO hubs will also help.

We also hope the Budget provides for classifying the revenue earned by the MRO industry in the category of deemed export for at least the next 10 years with full tax exemption and also rationalisation of customs duty on import of MRO tools and consumables.

The industry is also hoping that the Budget simplifies and standardises the customs requirement.

The writer is CMD, Aman Aviation and Aerospace Solutions Private Limited, and Joint Treasurer, MRO Association of India

Published on February 18, 2016
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