Govt MRO hub hopes may nosedive

New Delhi: High taxes, Customs duties and shortage of skilled manpower may hinder Civil Aviation Minister Praful Patel's ambitions of making India a global aircraft maintenance repair and overhaul (MRO) hub.
The high tax regime makes aircraft service above 50 per cent more expensive than international rates and might spell trouble for over a dozen MRO projects - several of them involving foreign direct investment - that have been announced so far.
For instance, servicing an aircraft in India would entail service tax of 12.5 per cent (overseas MROs do not charge this). Importing spares involves Customs duties of up to 50 per cent plus value added tax of 12.5 per cent and octroi of 4 per cent.
So, while a 'C check' (a half overhaul of the aircraft done every 18 months) on an Airbus A320 would cost around Rs 2 crore abroad, the estimated servicing costs in India would be close to Rs 3 crore.
The imposition of Customs duties is particularly unusual because Indian airlines importing spares are exempt from them but not MRO companies.
Accenture is currently drawing up a business plan for Air India's MROs and the executive said the airline "will definitely take up the taxation issue with the government soon".
16/02/08 Anirban Chowdhury/Business Standard

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Categories: Indian Aviation- In General Feb 2008, New Feb 2008