Share

Short haul for the long run

Share
Features

Much work remains to be done to make MRO a success in India.

 

The Indian maintenance, repair and overhaul (MRO) market currently stands at $800 million, which is expected to reach the $2.5 billion mark by 2020, according to industry estimates. India is well positioned to become a global MRO hub, given its growing aircraft fleet size, strategic location between South East Asia, North Asia, Middle East & Russia, rich pool of engineering expertise and relatively low labour costs when compared globally.
The government has made some efforts to support this particular sector over the past several years. The Airports Authority of India even reduced the royalty for the MRO sector to 13% from 36% for the use of airports owned by them. We expect to see improvements if the government implements custom and service tax exemptions too. There are state taxes such as VAT that also need to be rationalised. The overall taxes applicable to MRO industry in India create challenges since they lead to a disadvantage vis-à-vis neighbouring nations in South and South East Asia, where such taxes are lower or non-existent.
In addition, there is a need to expand the list of equipment exempt from customs duties to include everything under aircraft manuals (CMM, AMM, IPC). Also, the consumption period for customs duty exemption should be increased from one year to three years. Another suggestion would be for the government to accord SEZ status to MRO facilities to provide tax benefits and incentives including duty free import/domestic procurement of goods.
MRO requires substantial investment in terms of equipment and workforce. It also involves regular upgrading of tools and safety certification from agencies such as the Federal Aviation Administration and the European Aviation Safety Agency. Due to these requirements, the challenge is to encourage industry players and government organisations to invest in India. Infrastructure is a concern, as hangar spaces need to be created with reasonable rents and requisite clearances. To tackle these challenges, the government should consider converting redundant airport spaces in metros into MRO facilities.
For the ‘Make in India’ campaign, three elements are necessary: land, labour and capital. With specific reference to the aerospace sector’s labour pool, it will be crucial for the government and ministries of human resources and education to focus on developing an entire learning ecosystem around aeronautics to ensure the campaign is successful. Companies also need to take an initiative in offering and measuring training programmes.
Indian MROs must transition from line maintenance to carry out intensive maintenance work. Favourable policy changes will pave the way for MROs in India and would create a level playing field with global competitors.
Honeywell sees the following five megatrends:
• MRO growth will create thousands of jobs for aerospace engineers.
• India can save and earn forex by attracting carriers.
• Indian carriers will likely reduce their dependency on other countries for MRO requirements.
• We expect India to become an attractive MRO hub, given its growing aircraft fleet size and growing workforce of engineering experts.
The MRO partnership in India is key to Honeywell Aerospace’s strategy as we grow our presence in the region. India represents a growth pillar for Honeywell Aerospace, as it is a high growth region. During the past decade, Honeywell Aerospace’s business in India has grown rapidly since the advent of low-cost carriers. We are driven by our product offerings and capabilities in emerging technologies, which are committed to flight safety and efficiency.

 

Newsletter

Most Popular

Digital Edition

july 2020
From the magazine

Subscribe Now