Thursday, August 10, 2017

PM Modi tax breaks fire up India's $704 million plane care market

Indian Prime Minister Narendra Modi’s tax reforms will encourage more local airlines to service their aircraft within the country, a $704 million-a-year business that currently goes to Sri Lanka and Southeast Asia.

Simpler rules for doing business and scrapping of import duties on equipment and machine parts are benefiting companies that maintain, repair and overhaul planes, Air Works India Engineering Pvt. Managing Director Vivek Gour said in an interview. Air Works services Airbus SE and Boeing Co. single-aisle jets at an airport near the southern Indian city of Bengaluru.

Air Works, which is aiming to conduct an initial public offering in three years, is among companies that could benefit from a surge in air travel in India, an aviation market poised to become the world’s third largest by 2025. IndiGo, SpiceJet and other carriers in the south Asian nation have ordered more than $90 billion of aircraft from Airbus and Boeing in the past decade, which raises the potential of servicing about 1,000 aircraft in the next 10 years.

By government estimates, Indian carriers spend about 45 billion rupees ($704 million) annually on maintenance work at facilities in Sri Lanka, Singapore and Malaysia. With the new policy unveiled by Modi last year, some of that business could be lured back to India, benefiting firms like Air Works, Gour said.
10/08/17 Anurag Kotoky/Bloomberg/Economic Times