Government Boosts Aircraft MRO Services with New Policies and GST Cuts

The Indian government has implemented various policies to facilitate the setup of aircraft MRO (Maintenance, Repair, and Overhaul) services, aiming to increase the industry’s value from USD 2 billion to USD 4 billion in seven years. Measures include reducing GST rates, extending repair timelines, and offering land allotments at Airports Authority of India-operated airports.

The government has taken several proactive steps to facilitate the establishment of aircraft MRO services in India, which is expected to elevate the total business value from USD 2 billion to USD 4 billion in seven years, according to Civil Aviation Minister Kinjarapu Ram Mohan Naidu's statement in the Lok Sabha on Thursday.

In a significant boost for the domestic Maintenance, Repair, and Overhaul (MRO) industry, the government has standardized a 5 per cent GST rate on aircraft parts, components, testing equipment, tools, and toolkits.

Naidu emphasized that the MRO industry in the nation could reach USD 4 billion within seven years from the current valuation of USD 2 billion. He assured that the Centre would provide full assistance to anyone interested in establishing MRO facilities with an airstrip or airport anywhere in the country. He also highlighted the significant transformation in the aviation sector under the Narendra Modi administration, noting that domestic airlines have placed orders for over 1,100 aircraft in the past decade.

Seeking to create MRO facilities for both domestic and international airlines, the government has taken several policy, regulatory, and incentive-based steps. Measures include extending the export period for goods imported for repairs, increasing the time limit for re-import of goods under warranty, and reducing GST from 18 per cent to 5 per cent. Additionally, transactions by foreign OEMs to domestic MROs are treated as 'exports' with zero-rated GST.

(With inputs from agencies.)