Unification of GST slabs and the increase in aircraft fleet by domestic airlines are expected to double India's MRO industry from US$ 2 billion to US$ 4 billion in 7 years

Union Minister for Civil Aviation, Mr. 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. In the Lok Sabha, he addressed the challenges faced by the MRO sector, emphasizing that the government is not only focusing on the needs of Indian airlines but is also aiming to attract international carriers to use India’s MRO services, particularly in strategic locations like Thiruvananthapuram. He highlighted the recent unification of GST slabs for MRO components and services, which is expected to facilitate the integration of domestic MROs into global value chains. With domestic airlines placing orders for over 1,100 aircraft, the MRO industry in India is projected to double in size from US$ 2 billion to US$ 4 billion over the next 7 years.

He also outlined several key initiatives by the Ministry of Civil Aviation to strengthen the MRO sector, including the potential extension of the Production Linked Incentive (PLI) scheme to the industry, which could further accelerate its growth. The recent GST reform, which introduced a uniform IGST of 5% for all aircraft parts and components, was described as a "historic decision" aimed at simplifying taxation and propelling the industry toward a US$ 4 billion valuation by 2031. Additionally, the Minister mentioned support for establishing MRO facilities across India, with the government providing policy and regulatory backing. The extension of the export period for goods imported for repairs, the exemption of customs duties on tools, and the allowance of 100% Foreign Direct Investment (FDI) via the Automatic Route for MROs are also expected to enhance the sector's efficiency and global competitiveness.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.