Indian Aircraft MRO Industry Set for 50% Growth by 2026

India's aircraft maintenance, repair, and overhaul (MRO) industry is projected to surpass Rs 4,500 crore revenue by 2026, growing 50% since 2024, driven by increased fleet size, GST reductions, and enhanced service offerings, according to Crisil Ratings. This positions domestic MROs to compete globally and improve credit profiles.

The domestic aircraft maintenance, repair, and overhaul (MRO) industry in India is on track to achieve substantial growth, with revenues projected to exceed Rs 4,500 crore by fiscal year 2026, marking a 50% increase from 2024, according to Crisil Ratings. This expansion is anticipated to boost profitability margins and strengthen credit profiles.

This surge in the MRO sector is driven by a growing demand for maintenance services, necessitated by an increasing operating fleet size of Indian aircraft carriers, forecasted to expand by 20-25% by next year. Contributing factors include the addition of new aircraft and the return of grounded planes post-engine issues.

The recent reduction in Goods and Services Tax (GST) on aircraft components and services further enhances the competitive positioning of domestic MROs against international counterparts, easing working capital constraints. As profitability improves, these companies are expected to witness stronger credit profiles.

Indian MRO firms offer three primary services: Line checks, Airframe checks, and Redelivery checks. Crisil Ratings' Director Shounak Chakravarty highlighted that while line and airframe checks correlate with fleet size, redelivery checks will experience exponential growth next fiscal year due to a GST rate cut on aircraft components, placing Indian MROs on par with Asian competitors.

Despite being responsible for just 14% of total MRO spending by Indian carriers in fiscal 2024, Indian MROs are adding new services to expand their market share to 20% by the next fiscal year. Efforts to increase hangar capacity, enhance the local spare parts ecosystem, and train manpower are underway and expected to yield results in the medium term, as noted by Crisil.

(With inputs from agencies.)