The aviation industry is pinning its hopes on the Narendra Modi-led government’s ‘Make in India’ campaign to better exploit the potential of aircraft maintenance, repair and overhaul (MRO) business. Representatives of the industry have written to the aviation ministry as part of pre-Budget consultations to reiterate their demand of a cut in taxes in what it believes is a $700-million (Rs 4,400-crore) a year opportunity.
Industry executives say that high taxes and royalty charged by airports make the levies in India up to 50% higher than the global average and the domestic companies manage to get slightly more than just a tenth of the potential MRO business in the country. Several stakeholders, including the lobbying body MRO Association of India and global aircraft manufacturers have written to the government in the past month, requesting it to slash taxes.
The association has urged the government to increase the duration for which imported aircraft spares can be kept in storehouses without being taxed to three years from one year at present. Besides, the industry has sought a reduction in royalty charged by airports for charged by airports for usage of space for MRO facilities, from 13% for those under the Airports Authority of India and up to 30% for private airports.
All airlines in India currently prefer to use overseas facilities for most of their maintenance work. Indigo, the country’s biggest carrier has been taking its Airbus A320 planes to the Sri-Lankan Airlines’ facility in April, the airline signed a “multimillion dollar” contract with the Sri Lankan Airlines for maintenance of its aircraft. Jet Airways BSE 1.49 % takes its aircraft to multiple destinations, including Malaysia, while national carrier Air India maintains at least one of its planes in China.
Domestic MRO companies are increasingly making efforts to set up facilities abroad to garner business, much of which is expected to come from Indian carriers. Air Works is planning to set up a facility in Malaysia•