New Delhi has moved to simplify the goods and services tax imposed on aircraft and engine parts in a bid to boost the country’s MRO sector.

According to Civil Aviation Minister Kinjrapu Naidu, the GST for aircraft components and engine parts will be standardised at 5% effective 15 July.

ST Engineering will provide CFM56-7B engine MRO services to Alaska Airlines at the Group's engine MRO facilities in Singapore in an exclusive five-year contract.

Source: ST Engineering

Maintenance hubs such as Singapore have benefited from the lack of a strong MRO sector in India

Prior to this, the government had imposed GST rates of 5%, 12%, 18%, and 28% on aircraft components and engine parts.

“This new policy eliminates these disparities, simplifies the tax structure, and fosters growth in the MRO sector,” says Naidu.

Naidu adds that the government of prime minister Narendra Modi wants to boost India’s MRO sector.

“Our vision is to transform India into a leading aviation hub,” says Naidu.

“The Indian MRO industry is projected to become a $4 billion industry by 2030. This policy change is a crucial step towards building a strong ecosystem for MRO services, driving innovation, and ensuring sustainable growth.”

Historically, India’s tax structure has stood in the way of India’s becoming a major MRO centre, with the high GST rate as a particular bugbear for the industry.

Despite relatively low labour costs in India, airlines have found it cheaper to perform engine maintenance and heavy checks overseas.

 

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