In an attempt to create India as a manufacturing hub for the aviation sector, the draft civil aviation policy lays down a few incentives to start with. One of the worries has always been that the maintenance, repair and operations (MRO) job has always gone to Singapore, Sri Lanka and to the Gulf countries, which is worth Rs 5,000 crore.
Civil aviation secretary, RN Choubey said that 90% of the MRO job goes outside of India. With India expected to be one of the three largest aviation economies of the world, the amount of MRO activity is only going to increase. If steps to bring back MRO isn’t taken right now, India is expected to lose a lot of money.
Not only did Choubey talk of containing to the MRO job inside India, but he outlined the government’s ambition to make India into an MRO hub. “We expect India to be the MRO hub for this part of the world — India and other Asian countries,” he said.
The policy proposed MRO activities to be exempted from service tax. Also, the tools and tool-kits imported for MRO use will be exempted from customs duty. Aviation regulator, the directorate general of civil aviation will make a list of these tools. The imported tools and parts that will be used for the MRO activity will be allowed to be stored for a period of three years, tax-free. “This will ensure economies of scale,” said Choubey.
Choubey also said that the ministry of civil aviation will persuade all state governments to make VAT zero-rated on MRO services. The government will also hold discussion with airport operators to rationalise airport royalty and additional levies on MRO service providers.
The policy also made provisions so that foreign carriers can come to India. Foreign aircraft brought into India for MRO will be allowed to stay up to a period of six months. However, the aircraft cannot be used for any kind of commercial activity, and for a tenure that is beyond six months the carrier will have to take permission from the DGCA.
Visas will also be given to foreign MRO experts, especially in cases of an Aircraft on Ground situation. Foreign pilots operating an aircraft to and from India for the purpose of servicing at an Indian MRO entity will be issued temporary landing permits.