Air Works India (Engineering) Pvt Ltd, an indigenous provider of aircraft maintainable services, posted a net loss of Rs 21.9 crore last year on rising operating expenses and finance costs. Vivek N Gour, CEO, Air Works India, tells FE’s Rhik Kundu that though the aircraft maintenance repair and overhaul (MRO) industry in India is worth $500-800 million annually, the government policy hasn’t encouraged setting up of MRO units here. Excerpts from the interview:
What are the major challenges the MRO industry faces in India?
In an industry that is globally competitive and has thin margins, Indian airlines often find it difficult to bear a 25% tax, i.e. 12% service tax and 13% royalty tax, on maintenance and repair overhauls. They prefer to fly 2,000-3,000 kms to an international destination for their yearly maintenance, instead. The MRO industry also requires hangers at airports. The government has been very reluctant to either build hangers or provide land to build hangers at airports. Also, it takes up to five days to get spare parts cleared from the customs, which is a major disadvantage in this industry. So, unless these fundamentals change, the potential for MRO in India will always remain a promise that is not fulfilled even though Indian airlines continue to place huge aircraft orders.
05/02/14 Rhik Kundu/Financial Express
To Read the News in full at Source, Click the Headline
What are the major challenges the MRO industry faces in India?
In an industry that is globally competitive and has thin margins, Indian airlines often find it difficult to bear a 25% tax, i.e. 12% service tax and 13% royalty tax, on maintenance and repair overhauls. They prefer to fly 2,000-3,000 kms to an international destination for their yearly maintenance, instead. The MRO industry also requires hangers at airports. The government has been very reluctant to either build hangers or provide land to build hangers at airports. Also, it takes up to five days to get spare parts cleared from the customs, which is a major disadvantage in this industry. So, unless these fundamentals change, the potential for MRO in India will always remain a promise that is not fulfilled even though Indian airlines continue to place huge aircraft orders.
05/02/14 Rhik Kundu/Financial Express
