Announcing measures to boost the country’s domestic aviation sector, Finance Minister Nirmala Sitharaman on Saturday said steps will be taken to make the country a hub for Maintenance, Repair and Overhaul (MRO) of aircraft.
“Not just civil aircraft but defence aircraft can also benefit from the MRO if we make India a huge hub ... Maintenance cost for all airlines will come down and that again will have a ripple effect on passengers. Travellers can probably pay less after that,” she said.
The announcement was made by Sitharaman as part of the fourth tranche of stimulus measures to boost the economy amid the coronavirus pandemic.
She also announced auctioning of six more airports on public-private partnership (PPP) basis and taking steps for better utilisation of Indian airspace.
A competitive Indian MRO industry would help local airlines reduce expenses on such works which are currently done mostly overseas. India was one of the fastest-growing aviation markets in the world and has high growth potential.
For MRO, Sitharaman said India has all the capacities, manpower and soft skills required.
Aircraft component repairs and airframe maintenance segment is worth around Rs 800 crore and would increase to Rs 2,000 crore in three years.
“India can be the centre for many of the flights that go to South East Asia, Australia and westwards also... If we make sure, MRO ecosystem is created in India for which the tax regime has already been altered so that it favours setting up MROs in India.
“This is a major step we wanted to make sure that India benefits from,” she noted.
According to the Economic Survey for 2019-20, the annual import of MRO services by Indian carriers is around Rs 9,700 crore.
“With airlines’ fleet growing annually by 100, the size of domestic and imported Indian airline MRO is set to grow annually to Rs 21,600 crore in the next five years and to Rs 36,000 crore once the fleet size reaches 2,000 aircraft,” the Survey said.
The survey had also said that high airport tariffs, shortages of certain skilled manpower in the civil aviation sector and recourse to overseas suppliers of MRO facilities, among others, have contributed to engendering cut-throat competition amongst domestic airlines.