Monday, December 13, 2021

Airlines need to persuade OEMs to develop MRO infra in India: Jyotiraditya Scindia

Union Civil Aviation Minister Jyotiraditya Scindia has urged Indian airlines to persuade their original equipment manufacturer (OEM) vendors to develop maintenance, repair and overhaul (MRO) facilities in the country.

“When they secure orders for fleet expansion, they must also put the impetus and thrust on OEM suppliers to be able to bring their MRO capacities into India,” said Scindia.

Emphasising the ready availability of the engineering base required for the purpose, he added, “The policy construct is in place, the market is there and the demand for aircraft is increasing. Both the industry and OEMs need to work with us to make that possible because it’s something that’s going to help them in the longer term.”

Scindia made these observations at the three-day annual gathering of industry chamber Confederation of Indian Industry (CII) in association with the Department for Promotion of Industry and Internal Trade (DIPP).

According to official estimates, the market size of the country’s civil aviation industry is currently pegged at Rs 90,000 crore. Of this, MRO segment accounts for about 15 per cent share, or Rs 13,500 crore. However, as things stand today, 85 per cent of MRO-related work gets offshored to countries like Sri Lanka, Malaysia, Singapore and the UAE, with only 15 per cent being done in India.

This means that entities based in the country are left handling a paltry Rs 2,000 crore of the business, with the rest of the money flowing overseas.

Making India a global MRO hub:

Under the National Civil Aviation Policy (NCAP), announced in 2016, the Prime Minister Narendra Modi-led NDA government is keen to develop the country as Asia’s MRO hub to attract business from foreign airlines under its ‘Make in India’ initiative.

Since long, the MRO segment had demanded equal opportunities for growth, aligning of taxation at par with competing hubs in the country’s neighbourhood, lowering of import duty on spare parts and a favourable GST regime.

In response, GST on MRO services was reduced to 5 per cent from 18 per cent in March last year. In September this year, Scindia had announced a 100-day plan for the civil aviation sector, comprising policy interventions, development of airports and heliports and the MRO segment.


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