By Staff Correspondent
Indian airlines are poised to expand their fleet capacity by 15% annually, with an addition of 100 to 110 aircraft per year, leading to close to 1,200 aircraft by 2027, according to Pulak Sen, Founder and Secretary General of the MRO Association of India. The Tata Group-controlled Air India commands the largest-ever order placed by an Indian carrier, comprising 470 planes, incorporating Airbus and Boeing aircraft.
Moreover, Air India is set to become the first Indian carrier to introduce the Airbus A-350 to its fleet, while leasing 30 aircraft to cater to the demand until the delivery of its planes. Meanwhile, Indigo, another Indian carrier, aims to include around 500 aircraft, while Akasa Air, its competitor, is steadily growing its aircraft fleet.
However, Boeing’s recent discovery of manufacturing flaws with the 737 Max aircraft could impede the delivery of the fleet expansion of Indian carriers such as Air India and Akasa Air. Although Boeing stated that the issue is not an immediate safety of flight concern, and the in-service fleet can continue operating safely, the matter is likely to affect several undelivered 737 MAX aircraft in production and storage. The company has informed the Federal Aviation Administration (FAA) of the issue and is taking steps to conduct inspections and replace the non-conforming fittings where necessary.
Currently, the Indian aviation sector has a total of 731 commercial aircraft and 17 cargo planes, making up a fleet of 714 commercial aircraft. According to Sen, the Indian aviation sector has 486 Airbus types, 143 Boeing types, 62 ATRs, 28 Bombardier Q400s, ERJ5, one E-175, two Caravans, and two Dornier 228s.
Regarding the Indian Maintenance, Repair, and Overhaul (MRO) industry, Sen observed that its worth was USD 1.7 billion in 2021, with expectations to reach USD 4 billion by 2031. The global MRO market was valued at USD 68.5 billion in 2021, with a projected demand of USD 117 billion by 2031. The Indian MRO industry recorded an 8.9% compound annual growth rate (CAGR), compared to a 5.6% CAGR globally.
The Indian government has implemented various measures to support the growth of the MRO industry, including exemptions from import duty on special tools and equipment for MRO, customs duty waivers extending to spares only for airlines to MROs, simplifying clearance processing of parts, permitting 100% Foreign Direct Investment (FDI) through an automatic route for MRO, relaxing restrictions on the use of duty-free components from one year to three years, allowing aircraft brought into the country for MRO to remain from one month to six months without penalties, and changing the place of supply (PoS) of MRO services to the recipient’s location to ensure a level playing field for MRO in India and to encourage the establishment of MRO facilities in India by Indian or foreign entrepreneurs.
Furthermore, the GST Council reduced the GST rates on MRO services offered by domestic MROs from 18% to 5% with effect from April 1, 2020, significantly boosting the establishment of MRO facilities in India. Sub-contracted transactions to domestic MROs by foreign MROs are now considered exports with zero-rated GST, meaning no tax is imposed when foreign OEM sub-contracts work with an Indian MRO.
Air India Engineering Service Limited, owned by the government, is India’s largest MRO, with six primary bases throughout the country. On November 17, 2022, IndiGo opened its second MRO facility in Bangalore, while Air Works India is India’s largest third-party MRO. GMR AeroTechnik is another third-party MRO based in Hyderabad, while AAR-Indamer Technics Private Limited is a joint venture that will establish a facility in Nagpur.
Currently, most MRO services are outsourced to other countries, but MRO infrastructure is expanding in India due to government incentives and alliances with foreign MROs. The industry is highly regulated and essential to Indian civil aviation. Challenges remain in upscaling equipment and processes, logistics and ecosystem development, and skilling the workforce.
