The Centre’s efforts to make the country a hub for Maintenance, Repair and Overhaul (MRO) of aircraft is beginning to take wings. While the Airports Authority of India (AAI) is gearing up to identify a site and invite bids for an MRO at Tirupati and two other airports, new ventures have been announced by multiple players, including Boeing, Airbus, Hindustan Aeronautics Limited, and Pratt & Whitney, for setting up repair facilities in India.
Currently, about 85 per cent of airline-related repair work is done outside the country at MROs located in UAE, Singapore, Sri Lanka, EU and US, among others. Indian aviation operators spend close to $1.4 billion on overseas MRO services. A senior official at the Ministry of Civil Aviation confirmed that “site identification for the MRO at Tirupati will be carried out by AAI and thereafter bid process will be initiated. This is part of the efforts by the Government to make it easier for MROs to be set up. For example, AAI has come up with a liberal MRO policy with significantly reduced land rentals. Revenue share payment to AAI by MRO has also been abolished.”
Last year, the Finance Ministry had reduced GST on MRO from 18 per cent to 5 per cent. In addition, transactions contracted by foreign OEMs in India are treated as exports with zero rated GST.
Creating an ecosystem
“Indian MRO is headed towards a period of high growth. The Ministry of Civil Aviation (MoCA) has made genuine efforts in solving long-pending issues that have plagued the industry. Our journey towards creating an ecosystem to make India a global MRO hub has begun,” Bharat Malkani, President, MRO Association of India said.
The MoCA official added: “The impact of the reforms in the MRO space will reflect in the next two to three years as new business alliances are forged and fresh investments come into India and new MRO infrastructure including aircraft hangers, tooling etc is developed,” the MoCA official added.
Nripendra Singh, a Growth & Strategy Consultant at Frost & Sullivan, too felt that the initial push could be a good boost for the industry, as it could motivate the players to invest more in the sector.
Aviation consultancy firm AT-TV’s Independent Consultant, Koushik Jagathalaprathaban, said India is sitting on a golden egg worth $1.4 billion but execution is key. “Stakeholders should note that comprehensive coordination is still required and given the exacting nature of the industry, one is only as strong as the weakest link,” he said.