Rationalise Tax Structure to Encourage Aviation MRO Units - Assocham
ASSOCHAM yesterday called for streamlining various taxes to encourage aviation maintenance, repair and overhaul (MRO) facilities as the country has huge potential to become a major hub due to low cost benefits, favourable geographical location and sharp upswing in air passenger traffic.
The Indian civil aviation sector is currently celebrating 100 years of existence but its share is just one per cent in the 50 billion dollar global MRO market.
Passenger traffic of scheduled airlines jumped from 73 million in 2005-06 to 142 million in 2010-11. At the same time, cargo traffic is expected to touch nine million tonnes from 2.33 million tonnes in the last financial year. India's scheduled airlines have 430 planes now. Industry estimates suggest this figure is likely to go up to 1,500 by 2025.
With a fleet size of Indian scheduled and non-scheduled operators likely to treble in the next one-and-a-half decade, the need for a strong domestic MRO industry gains ground. India's unique geographical position offers an opportunity to become a global hub for international airlines as well.
The minimum requirement for an MRO facility is about 100 million dollars. Indian rules allow 100 per cent foreign direct investment for greenfield MRO projects through the automatic route.
A full-fledged MRO unit doing all types of checks requires 35,000 to 45,000 engineers. Besides shortage of skilled personnel, the country faces stiff competition from neighbouring MRO hubs like Dubai, Singapore, Malaysia and China.