The central government’s decision to exempt basic customs duty on components and parts required for the manufacture of civilian, training, and other aircraft is unlikely to push global original equipment makers like Airbus or Boeing to set up manufacturing lines, but it will benefit the likes of Hindustan Aeronautics (HAL) and maintenance, repair, and operations players in the country.
“The move to exempt basic customs duty will make it cheaper for HAL to import parts needed for the production of the new generation Dhruv helicopters in the short term and will also improve cost competitiveness of the helicopters and SJ100 aircraft in the long run,” Ravi Kota, current director (operations) and future chairman and managing director of HAL, told Fe.
Hindustan Aeronautics plans to supply 10 NG Dhruv helicopters to Pawan Hans during the 2026-27 financial year, which will be deployed for offshore operations for Oil and Natural Gas Corp. The state-owned company is also currently discussing plans with Russia’s UAC to produce the SJ100 regional aircraft in India.
HAL on potential domestic demand
HAL last week said that it estimates a potential Indian demand of more than 200 SJ100 aircraft, driven by regional connectivity needs and about 400 helicopters in the coming years, including potential customers such as the Border Security Force, state governments, and operators targeting tourism and high-altitude or rescue missions.
The budget proposal also aligns with India’s goal to become a key player in aircraft MRO services. Major airlines in the country, such as IndiGo, Air India, and Akasa, are set to expand their fleets by at least 30% over the next two years. Currently, India handles 10% of the global MRO work.
Ashish Chhawchharia, partner at Grant Thornton Bharat, said that by lowering the cost of spare parts and tools, airlines can reduce maintenance expenses, improving fleet economics.
“The move underscores the government’s intent to strengthen India’s aviation ecosystem and attract global partnerships,” he said.
What did Abhay Pashilkar say?
Abhay Pashilkar, Director of the Council of Scientific and Industrial Research – National Aerospace Laboratories, also said that a new initiative will help grow flight training organisations in India, ensuring that pilots get more training locally. Recently, NAL signed a deal with a private company to manufacture the Hansa 3(NG), a two-seater trainer aircraft.
Similarly, Venkatesh Mudragalla, co-founder and COO of Jeh Aerospace, mentioned that the duty exemptions would enhance cost competitiveness in aviation manufacturing. He emphasised that maintaining consistent policies is vital for boosting India’s role in global aerospace and defence supply chains.
Last month, the Adani Group and Embraer signed a Memorandum of Understanding to manufacture commercial aircraft in India. Embraer will import aircraft components into India, the company had said.
Imports of aircraft components and engine parts are currently subject to a standard integrated goods and services tax (IGST) of 5%, which was announced in 2024. This uniform rate was recommended by the GST Council for various imports related to aircraft, including parts, components, testing equipment, tools, and tool kits.