These changes aim to expand the MRO industry from $2 billion to $4 billion over the next seven years.
A key reform is the new GST rate of 5% on all aircraft components and engines, effective July 15, 2024. This replaces the previous range of GST rates—5%, 12%, 18%, and 28%—which had led to operational challenges and GST accumulation issues. “This historic decision simplifies the taxation process and is projected to propel the MRO industry towards a $4 billion valuation by 2031,” said Naidu.
He emphasized the goal of making India a competitive player in the global MRO market. “India’s geographical advantage allows us to offer MRO facilities to numerous international airlines,” he said.
The government is considering extending the Production Linked Incentive (PLI) scheme to the MRO sector to further drive growth. Customs duties on tools and toolkits have been exempted, and the period for exporting goods imported for repairs has been extended from 6 months to 1 year.
Additionally, the government has permitted 100% Foreign Direct Investment (FDI) in the MRO sector through the Automatic Route. “We are committed to providing all policy and regulatory support to ensure the success of these initiatives,” Minister Naidu added.The Ministry of Civil Aviation will assist in setting up MRO facilities across India to attract both domestic and international airlines, it said in a note. These measures are expected to significantly boost the MRO industry’s capacity and global integration.
