Aircraft MRO industry likely to reach $ 4 billion in seven years: Minister tells Lok Sabha

The government has taken several steps to facilitate setting up of aircraft MRO services in India and the value of the total business may go up from USD 2 billion to USD 4 billion in seven years, Civil Aviation Minister Kinjarapu Ram Mohan Naidu said in the Lok Sabha on Thursday.

He also said that, in a major boost to the domestic Maintenance, Repair and Overhaul (MRO) industry and the aviation sector, the government brought a uniform rate of 5 per cent GST on aircraft parts components, testing equipment, tools and toolkits.

"The MRO industry in the country is expected to go up to USD 4 billion in seven years from the present USD 2 billion," he said during Question Hour.

Naidu said if anyone wanted to set up an MRO industry with an airstrip or airport anywhere in India, the Centre was ready to provide all assistance.

He said the country's aviation industry had seen massive transformation and growth during the past 10 years under the Narendra Modi government, with domestic airlines placing orders for more than 1,100 aircraft.

"We want to create MRO facilities for both domestic and international airlines. For this, work is in progress," he said.

According to Union Civil Aviation Ministry data, the government has taken several steps to facilitate setting up of aircraft MRO services in India through various policy, regulatory and other incentives.

As part of the announcements made in Union budget, the period for export of goods imported for repairs has been extended from six months to one year.

Additionally, the time limit for re-import of goods for repairs under warranty has been extended from three to five years.

The government announced new MRO guidelines on September 1, 2021, with a promise to provide land allotments for MROs in Airports Authority of India-operated airports.

The GST on MRO services has been reduced from 18 per cent to 5 per cent with full input tax credit from April 1, 2020.

Transactions sub-contracted by foreign original equipment manufacturers (OEMs)/MROs to domestic MROs are treated as "exports" with zero-rated GST from April 1, 2020.

The government has also exempted customs duty on tools and toolkits and simplified clearance processing of parts, besides allowing 100 per cent foreign direct investment via the automatic route for MROs.