The Civil Aviation Ministry is considering a steep reduction on the Goods and Services Tax (GST) levied on the aviation maintenance, repair and overhaul (MRO) industry.
“We are trying to bring it down to a level of 5 per cent (from existing 18 per cent),” Economic Adviser to the Ministry of Civil Aviation Vandana Aggarwal said, adding that they were in touch with the Finance Ministry on the matter.
At present, the MRO industry is taxed at 18 per cent, making aircraft servicing in India costlier than other countries.
There is also a proposal under consideration to give a five-year tax exemption to newly-set up MRO facilities, she said.
For existing MROs as well, there would be reduction in the GST burden.
Aggarwal was speaking at the Indo-French Defence and Aerospace Cooperation meet here today.
Addressing the session earlier, CEO of Air India Engineering Services H R Jagannath rued that the MRO industry was being “heavily taxed”.
In October last year, the MRO industry had made a representation to the Civil Aviation Ministry demanding protection from the GST.
While the exemption from customs duty on imports of spares and other materials gave a big boost to the industry, the GST offset the competitive advantage it had gained.
The airline industry spent about USD 950 million in 2016-17 in aircraft maintenance and serving and only 10 per cent of this business came to Indian MRO companies.