The government has accorded infrastructure status to boost India's fledgling industry for maintenance, repair and overhaul (MRO) of aircraft and engines. This would enable stakeholders in raising external borrowings.
The MRO industry would now on be considered part of the sub-sector of airport in the transport sector infrastructure for the purpose of External Commercial Borrowings (ECBs), according to latest policy change announced by RBI.
The RBI circular, issued on January 6, says "on a review, it has been decided that, for the purpose of ECB, 'Maintenance, Repairs and Overhaul' will also be treated as a part of airport infrastructure. "Accordingly, MRO, as distinct from the related services which are other than infrastructure, will be considered as part of the sub-sector of Airport in the Transport Sector of Infrastructure."
With aviation business growing in the country, the industry could potentially achieve an annual growth rate of 10 per cent over the next decade, the ministry of civil aviation said in a statement. The Indian MRO industry is currently pegged at $ 800 million and is expected to grow at a faster rate than before, with the expanding fleet size of Indian carriers and the entry of more players.
The global MRO market is estimated at $ 50 billion.
Industry sources said policy changes at this juncture to classify the capital-intensive industry as transport infrastructure was "quite timely". Since MRO has a long gestation period, access to foreign debt was vitally important and critical, they said.
With the MRO industry now able to avail ECBs for long tenure and cheaper debts from international markets, viability of the industry would improve and aid growth.
