MRO industry could become a $1 billion business in India
22 Oct 2008
Singapore: Indian aviation industry holds the potential for doing business to the tune of a billion dollars in the the maintenance, repair and overhaul (MRO) segment of the industry, with projected revenues of $1.07 billion by 2013.
A number of companies, including aircraft manufacturer Boeing in partnership with Air India, have announced joint ventures in MRO business. Reports suggest that a number of others are awaiting the addressal of some taxation issues before they chalk out their plans.
Addressing the audience of an MRO Asia symposium in Singapore, CS Tomar, vice president of engineering and maintenance for Kingfisher Airlines, said that the MRO market in India was presently worth a relatively small $405 million, even though it held the potential to grow to $1.6 billion by 2018.
Speaking to the media, Sitham Nadarajah, Jet Airways' vice president for technical development said that an MRO facility would make ''economical sense'' for his airline, as volumes are increasing and Jet Airways would be looking at D-checks for narrow bodied aircraft such as Boeing-737s. D-checks are carried out on aircraft every four-five years, which is when the aircraft is completely stripped, checked and restored.
India currently has a fleet of 907 aircraft including helicopters, business jets and around 395 commercial aircraft. While the industry is clear that it makes business sense for the MRO industry to move into India, some issues remain to make the industry a viable proposition. The high entry costs, specifically on account of the high taxation is proving to be de-motivator.
Industry sources say that repairs undertaken outside India do not have any service tax or value added taxes applicable to them, while those in India do. Moreover, since the country does not have a good MRO base, a number of Indian carriers prefer to get their aircrafts looked after by facilities abroad. They cite the case of Lufthansa Technik, which had partnered with Hyderabad International Airport for an MRO facility, and later backed out citing high taxes that made it too expensive to sustain operations in India.
However, directorate general of civil aviation (DGCA) deputy director RK Maheshwary says that taxation is an issue that is governed by the finance ministry.
