Pushed to the brink due to a skewed tax policy, domestic aircraft maintenance, repair and overhaul (MRO) players are aggressively lobbying with the government to create a level playing field for them against their foreign counterparts.
Bharat Malkani, president, MRO Association of India (MAOI), told DNA Money that India was losing close to 90% or $1.4 billion (FY18) of MRO business to overseas players due to discriminatory levies.
According to him, while there was a goods and services tax (GST) of 18% on domestic MRO services, the customs duty on imported MRO was just 5%. He said such a discriminatory tax regime was making domestic MRO companies less competitive against their foreign rivals.
"Indian MRO companies are shutting down because they are not able to fairly compete with overseas players because of discriminatory taxes, which has put them at a cost disadvantage. We are paying 18% GST on sale price while overseas players are paying 5% at cost price. So, the gap is effectively around 21-22%," he said.
Malkani said the difference in levies between domestic imported MRO services was roughly 13%. This made it more cost-effective for local airlines to send their aircraft to markets like Singapore, Sri Lanka, Dubai, Malaysia, Middle East, Germany and other countries for maintenance checks.
"We (MAOI) don't want concession or subsidies. We want a level playing field. If 18% is my GST, you (government) put an 18-20% duty on imports. (US President Donald) Trump is imposing a tariff for protecting domestic industry. Here, we are trying to protect a foreign industry by giving it a subsidy of 13%," he lamented.
12/12/18 Praveena Sharma/DNA
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Bharat Malkani, president, MRO Association of India (MAOI), told DNA Money that India was losing close to 90% or $1.4 billion (FY18) of MRO business to overseas players due to discriminatory levies.
According to him, while there was a goods and services tax (GST) of 18% on domestic MRO services, the customs duty on imported MRO was just 5%. He said such a discriminatory tax regime was making domestic MRO companies less competitive against their foreign rivals.
"Indian MRO companies are shutting down because they are not able to fairly compete with overseas players because of discriminatory taxes, which has put them at a cost disadvantage. We are paying 18% GST on sale price while overseas players are paying 5% at cost price. So, the gap is effectively around 21-22%," he said.
Malkani said the difference in levies between domestic imported MRO services was roughly 13%. This made it more cost-effective for local airlines to send their aircraft to markets like Singapore, Sri Lanka, Dubai, Malaysia, Middle East, Germany and other countries for maintenance checks.
"We (MAOI) don't want concession or subsidies. We want a level playing field. If 18% is my GST, you (government) put an 18-20% duty on imports. (US President Donald) Trump is imposing a tariff for protecting domestic industry. Here, we are trying to protect a foreign industry by giving it a subsidy of 13%," he lamented.
12/12/18 Praveena Sharma/DNA
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