 "From Dassault to Boeing: India's military aircraft MRO dreams take flight")
India has taken notable steps in its journey towards becoming a maintenance, repair, and overhaul (MRO) centre for military aircraft and doubling the larger industry to $4 billion by 2030 in recent months, with global aerospace majors like France's Dassault Aviation and the United States' (US') Lockheed Martin and Boeing either announcing or indicating substantial plans for India.
At present, India is home to $2 billion in MRO business.
Local partners -- the Tata Group and AI Engineering Services Limited (AIESL) -- are also involved in these projects, while Goods and Services Tax (GST) policy changes are expected to give the development of a robust domestic MRO ecosystem a fillip.
IAF's Rafales could soon be maintained, repaired in India
On Tuesday, news agency ANI reported that Dassault Aviation was in the process of establishing a new MRO facility in Noida. This facility will support the French-origin combat aircraft utilised by the Indian Air Force (IAF).
At present, the IAF operates approximately 50 Mirage-2000 jets, inducted during the 1980s, alongside 36 Rafale fighters, which have been inducted more recently.
Unnamed defence establishment officials have revealed that Dassault recently informed the Ministry of Defence (MOD) and the IAF about establishing a new Indian entity, Dassault Aviation Maintenance Repair and Overhaul India (DAMROI), to provide MRO support for French-origin fighter aircraft in India.
Dassault also informed the MOD that the creation of this new MRO company aligns with India's Aatmanirbhar Bharat (self-reliance) initiative. The facility is reportedly expected to be situated in one of the industrial sectors of Noida, Uttar Pradesh.
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Moreover, Dassault confirmed that the new entity would be led by an Indian national, Posina Venkata Rao, who is an experienced Dassault representative in India.
Rao, who has been affiliated with Dassault Aviation for many years, will head a team composed of both French and Indian personnel.
Dassault also revealed plans to gradually expand the MRO capabilities at DAMROI in collaboration with the domestic aerospace industry, aiming to further enhance support for French-origin fighter jets in IAF's inventory.
At present, negotiations are underway with Dassault to supply the marine variant of the Rafale jets to the Indian Navy. The Navy plans to acquire 26 Rafale Marine aircraft, intended to be operated from the aircraft carrier INS Vikrant.
Lockheed Martin-Tata setting up C-130 MRO base
Ahead of the news about Dassault, Lockheed Martin and India's Tata Advanced Systems Ltd formalised a "teaming agreement" on September 10, under which, they will establish an MRO facility in India for the C-130J Super Hercules military transport aircraft.
This facility will not only support the IAF's fleet of C-130Js, but also cater to the global fleet of these aircraft, which are operated by 23 nations.
This will reportedly be the first comprehensive MRO setup by a global aviation major in India.
Moreover, a joint statement by Tata and Lockheed Martin indicated their intent to expand the production and assembly of C-130Js in India, but only if they secure the contract for the IAF's Medium Transport Aircraft (MTA) programme.
Speaking to ThePrint, Tata Advanced Systems Chief Executive Officer (CEO) and Managing Director Sukaran Singh said that the agreement marks his company's entry into the defence MRO sector for large aircraft platforms.
Boeing partners with Indian firm to support Navy's P-8I fleet
Boeing announced in August a partnership with India's AI Engineering Services Limited (AIESL) to enhance local MRO capabilities for the Indian Navy’s fleet of 12 P-8I maritime surveillance aircraft.
Through this partnership, the firms will offer in-country overhaul services for critical components of the P-8I fleet.
In fact, shortly before the announcement, the collaboration achieved a significant milestone with the first P-8I aircraft landing gear overhaul completed at INS Rajali. Boeing had stated that the development reflected the increasing indigenisation of complex MRO services within India.
At the time of the announcement, AIESL CEO Sharad Agarwal had expressed pride in the partnership, and while speaking to Business Standard, noted that it represents a significant step toward India's goal of becoming a regional MRO hub.
The Boeing-AIESL collaboration is part of the Boeing India Repair Development and Sustainment (BIRDS) hub programme.
US President acknowledges India's policy boost to MRO sector
During discussions between Prime Minister Narendra Modi and US President Joe Biden, during the former's recent three-day visit to the US, both leaders reaffirmed their commitment to boosting reciprocal defence hardware supply.
According to a joint fact sheet issued after their meeting, held at President Biden's private residence in Wilmington, Delaware, the American leader also welcomed India's decision to introduce a uniform GST of five per cent for the MRO sector, which includes all aircraft and aircraft engine parts.
PM Modi and President Biden also lauded commitments from US companies to bolster India's MRO capabilities, including the repair of aircraft and unmanned aerial vehicles.
Additionally, they praised the recent collaboration between Lockheed Martin and Tata Advanced Systems Ltd.
MRO sector to reach new heights thanks to change in taxation policy
These successive announcements in such a short period of time might not be a coincidence.
On July 15, Union Civil Aviation Minister Kinjarapu Ram Mohan Naidu declared the introduction of a uniform Integrated Goods and Services Tax (IGST) rate of 5 per cent on all aircraft and aircraft engine components, effective from the same day.
This policy shift represented a significant advancement for the domestic MRO sector.
Commenting on the development, Naidu had remarked, "The establishment of a uniform 5 per cent IGST rate on MRO items offers a substantial boost to the aviation industry. Previously, the presence of varying GST rates -- ranging from 5 per cent, 12 per cent, 18 per cent, to 28 per cent -- on aircraft components posed challenges, such as an inverted duty structure and the accumulation of GST in MRO accounts. This new policy addresses these issues by streamlining the tax structure and fostering growth within the MRO sector."
Moreover, Naidu had highlighted the sector's future prospects, stating, "The Indian MRO industry is projected to become a $4 billion industry by 2030. This policy change is a crucial step towards building a strong ecosystem for MRO services, driving innovation, and ensuring sustainable growth."
In August, Naidu had informed the Lok Sabha that if any company wants to set up an MRO industry with an airstrip or airport anywhere in India, the Centre was ready to provide all necessary assistance.