More Helping Hands

Smruti D

India is seen as the most lucrative aviation markets in the world because of the sheer number of people preferring to travel by air within the country in the past few years. As per the International Air Transport Association’s (IATA’s) data, in 2018, India was the fastest growing domestic aviation market for a fourth consecutive year with 18.6 per cent increase in growth as compared to the previous year.

A view of the static display at India Aviation Show 2016 (now renamed Wings India)

While consumer aspiration was at an all-time high, 2019 took a beating due to the grounding of Jet Airways and economic slowdown. That year, the passenger traffic growth slowed to 3.47 per cent. Despite the drop, Indian Airlines’ fleet grew by 29 per cent in 2019. The number of commercial aircraft rose to 669 from 521 in 2018. As the aviation sector resumes growth after Covid-19 pandemic, IATA’s data suggests that India will surpass the US and China and become a global aviation hub by 2037.

The growth of the aviation sector, hand-in-hand, brings in more opportunities for the Maintenance, Repair and Overhaul (MRO) industry. Currently, the MRO industry in India stands at USD900 million and has the potential to grow further. A number of Indian and foreign airlines get their maintenance done from the Indian MRO industry. The announcement of budget 2016-2017 brought in customised provisions for the Indian MRO industry so it could grow and India could become an MRO hub of Asia. The tools and tool-kits used by the MRO were exempted from customs and excise duty and the storage period was extended for three years for aircraft spare parts.

Founder secretary general MRO Association of India, Pulak Sen, says that the battle for recognition of an MRO industry in India has been long drawn. The MRO Association of India was first established in 2011. It was during the 2012-2013 budget that the government took a decision to exempt the industry from custom duties on spare parts, aircraft tyres and testing equipment.

“With airlines buying new aircraft and adding to their fleet, the work of the MRO industry will increase multi-fold. Additionally, before the lockdown, some MROs were getting overseas work because of price arbitrage in India. The manpower cost in India at the highest was USD 42 per hour, whereas in countries like Singapore and Malaysia, it was USD 65 per hour. In the West it is much higher. In April 2020, we downsized the GST from 18 per cent to five per cent—a 13 per cent advantage for the industry. Out of this 13 per cent, they can give a five per cent discount for any MRO work they undertake. Even then they will save eight to nine per cent, which will add to their profit margin. Unfortunately, this happened at the time of the pandemic, so we may not see the results this year. But we will surely see the results next year. In any case, the world aviation industry is in doldrums bec