NEW DELHI: Union Minister for Civil Aviation, Rammohan Naidu, reaffirmed the government’s commitment to creating a robust environment for domestic and international airlines to access world-class Maintenance, Repair, and Overhaul (MRO) facilities in India.
Addressing the Lok Sabha on Thursday, Aug 8, the Minister emphasized that strategic efforts are being made to position India as a global hub for MRO services.
“We are not only focusing on the needs of Indian airlines but also aiming to attract international carriers to use our MRO services, including in strategic locations like Thiruvananthapuram,” stated Naidu, highlighting the government’s broader vision for the sector.
A major reform in the GST structure was announced, simplifying the taxation process for MRO services. The unification of GST rates to a uniform 5% IGST for all aircraft components, effective from July 15, 2024, is expected to propel India’s MRO industry towards a $4 billion valuation by 2031. Naidu explained that this historic decision addresses previous challenges, such as the inverted duty structure, and facilitates smoother integration of domestic MROs with global value chains.
Naidu acknowledged the growing demand for MRO services in India, driven by recent orders of over 1,100 aircraft placed by domestic airlines. This surge is expected to double the size of the MRO industry over the next seven years. The Minister emphasized India’s geographical advantage, which positions the country to offer competitive MRO services to international airlines.
Efforts are also underway to align Indian MRO facilities with international standards. Naidu assured that the government is committed to harmonizing these facilities with global practices, making India a preferred destination for international airlines.
The Minister indicated that the government may consider extending a Production Linked Incentive (PLI) scheme to the MRO industry, depending on demand. This move could further accelerate the sector’s development and growth.
The Ministry of Civil Aviation has focused on facilitating stakeholders across India to establish MRO facilities for domestic and international airlines. The government has pledged comprehensive policy and regulatory support to ensure the success of these initiatives.
In line with recent Union Budget announcements, the government has extended the period for exporting goods imported for repairs from six months to one year. Additionally, customs duty exemptions on tools and toolkits, along with the allowance of 100% Foreign Direct Investment (FDI) via the Automatic Route for MROs, are expected to enhance operational efficiency and reduce turnaround times.