The opportunities ahead
India’s MRO Sector
Despite the very fast growth and successful implementation of national aviation policy, India’s maintenance, repair and overhaul (MRO) sector is still struggling to develop an analogous MRO network. Although India is well-established as one of the world’s fastest air transport growth regions, with commercial airlines operating more than 400 aircraft, Jet Airways and other Indian private carriers are heavily reliant on foreign MRO service providers for maintenance, mainly engine management contracts, component contracts and heavy checks.
According to Civil Aviation Secretary Rajiv Nayan Choubey, 90% of an MRO workscope goes outside of India. “The government estimates Indian carriers alone generate MRO business worth Rs. 50 billion ($745 million) annually, and most of that is spent in countries such as Sri Lanka, Singapore, Malaysia and the Middle East as India lacks MRO facilities,” Choubey stated.
With the fleet size of Indian scheduled and non- scheduled operators likely to double by 2020, the need for a strong domestic MRO industry is critical, he added. from paying taxes such as customs duty, an airport royalty and value-added tax (VAT). The policy also made provisions to enable international carriers to keep their aircraft in India for MRO work for up to six months. However, the aircraft during that time cannot be used for any kind of commercial activity, and carriers need permission from the authorities if the duration exceeds six months. The policy also ensures that adequate land be made available for MRO service providers at all future airports. Aviation experts have applauded the move, noting that allocation of space for maintenance and repair of aircraft can make life easier for airlines and reduce costs.“This is the first time that the MRO industry has received such detailed attention in a policy proposal,” opined Dubey. “It is therefore likely to bring in significant investments, infrastructure, technology and employment over the next 3-5 years.”
Lowering or eliminating taxes or duties on imported materials, such as parts, and the extension of duty-free spares storage from one year to three years are other important features of the policy. “Taxes on needed materials such as tooling and spare parts brought into the country to perform work have hampered local suppliers’ abilities to compete with their counterparts in places like Indonesia and Singapore,” Dubey added. According to data released by the Department of Industrial Policy and Promotion (DIPP), FDI inflows in the air transport (including air freight) sector between April 2000 and September 2017 was US$ 1.59 billion. India is estimated to see an investment of US $25 billion in the next decade in the airports sector, and traffic growth of 13 per cent, according to a Morgan Stanley report. According to them, the share of air travel in air and rail travel combined in India will grow to 15.2 per