Page 28 - AAA JANUARY - FEBRUARY 2019 Online Magazine

plan to develop India as an MRO hub through tax benefits and
easing security norms. According to the new draft Civil Aviation
Policy, the government is mulling over exemptions like customs duty,
zero-rate service tax, simplification of clearance and easy access
for foreign pilots and technicians to help the MRO sector grow.

“Of the MRO business of Indian carriers, which stands at 50 bil-
lion rupees (about US$760 million), 90 per cent is currently being
spent outside India in Sri Lanka, Singapore, Malaysia and the UAE
among others. “Given our technology base, the government is keen
to develop India as an MRO hub in Asia, attracting business from
foreign airlines,” says Civil Aviation Secretary R N Choubey.

The policy proposes that tools and tool-kits imported for MRO
use will be exempted from customs duty. Aviation regulator, the overhaul remains the largest market in MRO
directorate general of civil aviation will make a list of these tools. segment in India with about 60 per cent, while
The imported tools and parts that will be used for the MRO activity airframe MRO accounts for 24 per cent and
will be allowed to be stored for a period of three years, tax-free. components service the remaining 16 per cent,
“This will ensure economies of scale,” says Choubey. according to a KPMG analysis. “All that it needs
is the continued intervention on part of the gov-
The government will also hold discussion with airport operators ernment to create a congenial environment in
to rationalize airport royalty and additional levies on MRO service the country to withhold the outgoing business,
providers. The policy also made provisions so that foreign carriers arrest the flow of valuable foreign exchange
can come to India. “Foreign aircraft brought into India for MRO and employment to young technical and engi-
will be allowed to stay up to a period of six months. However, the neering graduates,” says Pulak Sen, Founder
aircraft cannot be used for any kind of commercial activity, and General Secretary of the MRO Association of
for a tenure that is beyond six months the carrier will have to take India.
permission from the DGCA,” he adds. Visas will also be given to
foreign MRO experts, especially in cases of an aircraft on ground The ‘Make in India’ initiative of the government
situation. Foreign pilots operating an aircraft to and from India for provides a perfect landscape for setting up of
the purpose of servicing at an Indian MRO entity will be issued a comprehensive MRO base in the country. “A
temporary landing permits, the government official informs. The strong MRO industry is critical to the growth of
sector is even open to international players as the government is the aviation sector in India It produces employ-
now allowing 100 per cent foreign direct investment (FDI) in the ment, and revenue to the government through
MRO sector that let foreign players to come in and exploit the taxable outcomes. India has a huge potential
potential of the market and expand their businesses. to be a global MRO hub due to its growing air-
craft fleet size, strategic location advantage,
Need of the Hour rich pool of engineering expertise, and lower
In terms of MRO spend by value over different categories, engine labour costs,” says Sen.

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