The government is mulling certain measures to support the growth and development of the maintenance, repair and overhaul (MRO) industry, an important segment for the aviation sector, sources said.
A meeting was held last week in the finance ministry to discuss the issues being faced by the sector in order to promote its growth, they said.
The MRO industry has pitched for protection from the Goods and Services Tax (GST).
The Indian MRO market, estimated to be worth about USD 900 million, is said to be costlier than those in Sri Lanka, Dubai, Hong Kong, Singapore and China due to higher taxes.
A competitive Indian MRO industry would help local airlines reduce expenses on such works which are done mostly overseas.
The airline industry spent about USD 950 million in 2016-17 in aircraft maintenance and serving and only 10 per cent of this business came to Indian MRO companies.
According to the Economic Survey for 2019-20, annual import of MRO services by Indian carriers is around Rs 9,700 crore.
"With airlines' fleet growing annually by 100, the size of domestic and imported Indian airline MRO is set to grow annually to Rs 21,600 crore in the next five years and to Rs 36,000 crore once the fleet size reaches 2,000 aircraft," the Survey projected.
The survey also said that high airport tariffs, shortages of certain skilled manpower in the civil aviation sector and recourse to overseas suppliers of MRO facilities, among others, have contributed to engendering cut-throat competition amongst domestic airlines.
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