Civil Aviation Minister Rammohan Naidu has emphasised the Union government’s commitment to creating a robust environment for both domestic and international airlines to access world-class Maintenance, Repair and Overhaul (MRO) facilities in India.

Addressing the concerns raised regarding the challenges faced by the MRO sector, the Union Minister stated in the Lok Sabha on Thursday, “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.”

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The Union government has recently announced the unification of GST slabs for MRO components and services, which will facilitate the integration of domestic MROs with global value chains. The recent order by domestic airlines for over 1,100 aircraft is expected to double the size of India’s MRO industry from $2 billion to $4 billion over the next seven years.

In his address in the Lok Sabha on Thursday, Naidu underlined key initiatives taken by the Ministry of Civil Aviation to strengthen the MRO sector.

The Union Minister acknowledged the growing demand for MRO services in India and expressed the government’s ambition to cater not only to the domestic fleet but also to international airlines. “India’s geographical advantage allows us to offer MRO facilities to numerous international airlines, making us a competitive global player,” the Minister added.

He addressed concerns about the MRO industry’s integration into global value chains, affirming that efforts are underway to harmonise Indian MRO facilities with international standards. “We are committed to ensuring that our MRO sector aligns with global practices, making India a preferred destination for international airlines,” the Minister said.

The Union Minister highlighted the potential of the Production Linked Incentive (PLI) scheme to drive growth. He said that depending on the industry demand, the government could consider extending a PLI scheme to the MRO industry to further accelerate its development.

Naidu also highlighted a significant reform in the GST structure for MRO services.

Previously, the varying GST rates of 5 per cent, 12 per cent, 18 per cent, and 28 per cent on aircraft components created challenges, including an inverted duty structure and GST accumulation in MRO accounts. However, a landmark decision was notified on July 12, 2024, introducing a uniform IGST rate of 5 per cent for all aircraft parts, engines, and APUs, irrespective of the Chapter of the Customs Tariff Act, 1975, under which the item may be covered.

“This historic decision, effective from July 15, 2024, simplifies the taxation process and is projected to propel the MRO industry towards a $4 billion valuation by 2031,” the Union Minister said.

The Ministry of Civil Aviation will facilitate the stakeholders across India to establish MRO facilities for both domestic and international airlines. The government is committed to providing all policy and regulatory support to ensure the success of these initiatives.

As part of the announcements in the Union Budget, the government has extended the period for exporting goods imported for repairs from 6 months to 1 year. The customs duty on tools and toolkits has already been exempted. Additionally, the government has allowed 100 per cent Foreign Direct Investment (FDI) via the Automatic Route for MROs, aimed at achieving the best possible Turn Around Time (TAT).

The government remains committed to supporting the MRO sector with all necessary regulatory and policy enablement to ensure its growth and sustainability.