MAOI foresees Imminent collapse of the Indian MRO Industry
In the Interim Budget 2019 stating that despite the Government’s focus on developing and growing the Aviation sector, the Finance Ministry completely ignored the sector as well as its immediate ancillary industry – Maintenance, Repairs & Overhaul (MRO). The sector has been reeling under an unfair GST regime since it came into effect in 2017, putting the domestic MRO industry at disadvantage against foreign MROs. In a pre-budget memorandum, the MAOI had appealed to the Finance Ministry to reduce the GST on Indian MRO to bring it on par with foreign MRO services. Alternatively, the Association had suggested that the Customs Duty on imports of MRO services be applied at 18 percent.
“The year 2018-19 was already going downhill for the Indian MRO industry and with no plans or actions to revive it; the budget has spelled its death knell. We can’t even begin to explain how adversely this is going to affect the sector. Within the year an additional 30 percent MRO companies will shut down leading to unemployment, loss of revenues to the Government, and higher levels of imports leading to massive outflows of hard-earned ForEx. Indian MRO players will have to look for alternative professions or industries to carry on with their lives,” says Mr. Bharat Malkani, President, MAOI.
India is in the midst of an aviation boom with the Civil Aviation segment registering a consistent growth rate of 20 percent over the last few years. However, the Finance Ministry has decided to reduce the budget of Rs.9,700/- crore from last year to half of it for the year 2019-2020.
“At present, 90 percent of our country’s MRO requirements are imported. This import driven policy had already lost us 90,000 direct jobs to countries like Sri Lanka, Singapore, Thailand, France, and Germany. All we had asked for the Finance Ministry was to fix this lop-sided tax policy and to create a level playing field between the Indian MRO industry and foreign MROs. Now we are completely at the mercy of the GST Council’s last meeting before the election code of conduct is put into place,” concludes Mr. Malkani.