“A new aviation policy to boost the export of aircraft maintenance services by 2025” | Bombay News

In its attempt to encourage air service operators to conduct aircraft maintenance activities in the country, the Ministry of Civil Aviation (MoCA) announced in September a new policy, which includes leasing land through open tenders and the abolition of fees collected by the Airports Authority of India (AAI) for the Maintenance Repair and Overhaul (MRO) activity. In addition, in accordance with the policy announced by Minister of Civil Aviation Jyotiraditya Scindia, the allocation of land to entities establishing MRO facilities will be for 30 years, currently three to five years, as the government aims to make India a “global MRO hub”. ”

Industry experts said the new policy would not only help the growth of the domestic aviation industry, but could also boost the export of MRO services outside of India, especially in Southeast Asia.

Right now, air service operators send their planes for maintenance to foreign countries – mainly the Middle East and the Southeast Asian region – because it’s cheaper than the domestic market.

Available market reports estimate that the Indian MRO industry (non-defense) represents USD 2 billion per year, with domestic players managing just 16% of total activity. The remaining 85%, or nearly $ 1.7 billion, particularly in the area of ​​components and engines, is currently made abroad.

At the start of last year, the Center reduced the rate of the Goods and Services Tax (GST) on aircraft repair and maintenance work from 18% to 5% and announced that it would lease airport land to repair units at reduced rates to attract investment and stimulate growth. .

“AAI is trying to facilitate the development of the MRO industry in the country, in line with the positive measures of the MoCA to boost the industry through the National Civil Aviation Policy 2016 and in line with the Prime Minister’s campaign to to create an Aatmanirbhar Bharat, ”said an IAA spokesperson. noted.

The spokesperson added that tenders for the establishment of MRO facilities at five airports managed by AAI – Chennai, Begumpet, Chandigarh, Bhopal and Juhu – are in “final stages”.

Within MRO services, there are four main segments: airframe maintenance, engine maintenance, component maintenance, and daily and weekly checks (called line maintenance). Of these, engines and airframes account for around 50-55% of the work in value, with maintenance of engines and airframe components being the most lucrative business in the segment.

Anand Bhaskar, Managing Director and CEO of Air Works Group, which operates an independent MRO unit with facilities at multiple sites, said the policy initiatives will boost investment in the MRO sector and also support the expected growth of the company. national aviation industry. Air works is the country’s largest private provider of line maintenance services (at 21 international airports) to foreign airlines serving India.

According to the Oliver Wyman report released earlier this year, India’s airline fleet is expected to more than double by 2030 and experience significant growth in its MRO market.

“With the country’s aviation industry on a growth trajectory, it makes perfect sense to capitalize on this precious opportunity and expand the country’s aviation maintenance capabilities for greater autonomy, job creation. and expanding the value chain, instead of just focusing on cells, which most Indian MROs currently do, ”Bhaskar added.

Just before the Covid-19 pandemic, Air India’s now privatized engineering arm, Air India Engineering Services Ltd (AIESL), signed a memorandum of understanding with Pratt & Whitney to launch a joint MRO engine installation in Mumbai. At present, cell MROs in India cater to overseas customers due to the infrastructure required.

“The MRO industry will need to invest significantly in infrastructure to meet the challenges of fleet growth in commercial and business aviation. With the new policy that is going to be implemented, we are looking to fill these gaps over the next two years and step up to meet the demand from South Asia as a first step ”, President of MRO Association of India and President of Max AeroSpace and Aviation Bharat Malkani said, adding that the MRO association expects exports of these services to take off by 2025 from India, reaching a value of $ 5 billion.

Delhi-based GMR infrastructure group, which operates an MRO facility from Shamshabad Airport in Hyderabad, said the reduction in GST rates has reduced the cost of MRO services in India for domestic airlines, and that the new MRO policy will help strengthen national activities and stimulate investment.

Industry experts believe that while doing business abroad is indeed attractive, Bhaskar said, “It is important that India also takes appropriate, not necessarily similar, measures to strengthen its domestic aircraft maintenance industry. , on which all aircraft – regardless of their type (commercial / business / defense) – depend.

With the number of planes to be integrated into the Indian airlines’ fleet expected to double its current strength over the next several years, Bhaskar estimated that the domestic MRO industry may well grow at a compound annual growth rate. (CAGR) of 10%. or more, for the next few years.

“In order to make India an MRO hub, the focus is on creating infrastructure and construction technologies for engines, landing gear and main component maintenance. Currently, most engines, landing gear and components are sent out of the country for maintenance, ”said a spokesperson for GMR.

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