Home' Asian Aviation : AAV_May2012 Contents 32 AsianAviation | MAY 2012
High taxes in India remain a big deterrent
to Maintenance Repair and Overhaul
(MRO) and by the looks of it, will continue
to stifle the growth of the industry not
long ago, thought to be the engine for making India
the hub for MRO in South Asia.India presently has
around 370 commercial and 500 general aviation
aircraft (fixed and rotary). The potential for MRO
is swelling as fleet numbers escalate due to major
orders placed through the next five years.
The recent budget sop to slash full custom duty on
new, retreaded tyres and test equipment for aircraft
imported by third-party providers, is just a needle in
the haystack, says the industry. Aircraft parts and
tyres currently attract around 30 percent basic and
additional customs duty on import. Taking away from
the right hand and giving to the left, the government
recently, in all its wisdom, simultaneously increased
service tax from 10 to 12 percent.
The reality remains. Doing MRO in India is
more expensive that sending aircraft abroad
for maintenance. The local MRO industry faces
discriminatory tax position against foreign players ,
says Bharat Malkani, CEO of Mumbai-based Max
Till recently there was just one third party provider
- Air Works India Engineering is the only one to have
taken off in the midst of over 20 hopefuls that made
announcements and pulled out, including Lufthansa
Air Works India s staying power is mainly due
to its sage policy of tapping its inherent strengths
in general aviation and through acquisition of
companies abroad including Air Livery (with more
to come). The latest entrant MAS-GMR Aerospace
Engineering that officially launched in March this
year, has a great facility with no business, having
performed C checks on just three aircraft since its
soft launch in September last year.
OEMs Airbus and Boeing, bound by an offsets
clause following deliveries to Air India, are moving
slowly on MRO facilities in Delhi and Nagpur.
All this suggests the recent civil aviation ministry
statement that the Indian MRO industry will triple in
size from US$440 million in 2010 to US$1.3 billion
per annum by 2020, may be a damp squib. This
compares with the present MRO business of UAE
worth US$1.6 billion and China s US$2billion.
India is losing business because of its tax regime.
"The volume of MRO work sent out of the country
includes airframe maintenance worth US$30
million, engine maintenance worth US$300 million,
component work worth US$125 million and APU
India s MRO industry is potentially huge, but is being held back by
numerous, often self-in icted, challenges, writes Neelam Mathews
"The local MRO industry faces
discriminatory tax position against
foreign players" Bharat Malkani,
CEO, Max MRO Services.
Air Works ties up with Indian designer for interiors.
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