Revisit tax structures to boost MRO biz in India: Saraswat

The central and state governments both need to focus on their tax structures, among other things, to give a thrust to the aircraft Maintenance, Repair and Overhaul (MRO) business in India as it presents opportunities to the tune of USD 2.6 billion by 2020, said NITI Aayog member VK Saraswat.
He also said that the government is studying a proposal to set up a centre of excellence in smart manufacturing of defence products in Telangana.
"MRO business is expected to touch USD 2.6 billion by 2020 provided we do some hard thinking about removing some of the disability factors that we have today. They come as an impediment in the setting up of new MROs.

"State governments have huge VAT and other taxation on the spare parts used in MRO. (The Centre) on top of that has got some duties. So, this tax structure does not make the business in India competitive," Saraswat told reporters on the sidelines of the three-day Defence & Aerosupply India 2015 event here organised by Kenes Exhibitions and Telangana government.
He said that the new Civil Aviation Policy being brought out by the government is expected to address some of the issues or bottlenecks being faced by the MRO industry.
He said that the high interest regime in the country, too, has become a deterrent to attracting more investments in defence or other manufacturing sectors.

The government is currently working on a proposal for setting up a "smart manufacturing" facility which comprises three components -- a CoE, design and manufacturing facility and training for personnel, he added.

"What we want is to set up a Centre of Excellence for smart manufacturing in Telangana.
"From developing new processes for different applications, such as turbine blade or bearings, to a small prototype for an electronics unit, all that we should be able to do here," he said.
A detailed project report is being prepared, Saraswat added, although he said that he cannot give a figure for the investments required for the project.

Telangana Industries Minister J Krishna Rao and chief secretary Rajiv Sharma were among those who spoke at the session.