Aviation MRO companies are at disadvantage after GST which increases the cost of spares and labour. The industry has made a representation to the aviation ministry seeking an exemption from GST, arguing that it makes servicing aircraft in India costlier than abroad. Currently, around USD 950 million was spent on MRO activities of which only 10% is being carried out in India. Rest of the airlines fly to Dubai, Singapore , China, HongKong etc., due to difference in costs.
Indian Airlines industry one of the top 10 in the world spends more towards aircraft maintenance after fuel. Absence of MRO facility in India further adds to the cost and they frequently fly to Singapore or UAE. The industry is expected to reach USD 20 billion by the year 2020 with increase in civil aircrafts and surging defence purchases. Nagpur, Bengaluru and Hyderabad are fastly emerging centre for aircraft MRO. The industry is also seeing big players entering the Indian scene with Boeing and Airbus. With cheaper access to labour pool and other resources it can tap key markets of South East Asia. The new government has also accorded infrastructure status to MRO sector under NCAP (National Civil Aviation Policy apart from other incentives.