The aircraft maintenance, repair and overhaul (MRO) industry in India will not be in a position to compete with existing facilities in Singapore and Dubai, despite sops proposed by Finance Minister P. Chidambaram in Budget 2013-14.
Chidambaram has proposed extending the period for consumption/installation of parts and testing equipment for the MRO industry to one year from three months earlier. In addition, he has extended the exemption of basic customs duty for parts and testing equipment for MRO of aircraft.
Commenting on the Budget proposal relating to the sector, Amber Dubey, Partner and Head Aviation, KPMG, felt that Indian MROs still face high service tax and airport charges which continue to hurt their competitiveness with Dubai, Singapore, Kuala Lumpur and Colombo.
He, however, felt that the Budget been “disappointing” for aviation as the expectations of relief in aviation turbine fuel and MRO taxes and funding support for regional airports had been dashed.
“It is a small step in the right direction. The one year window for consumption/installation of spares is very realistic,” said Vivek Gaur, Managing Director, Air Works,
The Director, Delhi International Airport Ltd, Narayan Rao, felt that it was too early to say whether the implementation of the proposal would provide competitive advantage.
“The spin-off effect of having an MRO in India would be good in employment generation and other related activities,” said Rao.
Analysts said the Budget had no major sops for the aviation and MRO sector. However, the proposed concessions for aircraft maintenance facilities are expected to help airline companies reduce maintenance costs and enhance financial viability, industry watchers say.
“The Budget has proposed certain measures to promote mobilisation of funds for infrastructure sector in general that could also facilitate investments in the airport sector,” said Peeyush Naidu, Director, Deloitte Touche Tohmatsu India.
The Budget has also proposed providing Rs 5,000 crore possibly as equity contribution to the State-owned Air India, while the Maharaja will have to garner Rs 1,318.60 crore from its internal resources.
The funds from internal resources will be used for pre-delivery payments of six Boeing 787 aircraft which are to be delivered in 2013-14, the setting up of a GE Engine facility and purchase of spare engines for aircraft.
Golden cheer
However, Indians returning home after residing abroad for over one-year or transferring residence have something to cheer.
The Finance Minister has proposed raising duty-free allowance on jewellery for an Indian male passenger to Rs 50,000 from Rs 10,000 at present and to Rs 100,000 from Rs 20,000 for a women passenger.