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MRO in India: Trends, Challenges and Way Forward / 1
Trends, Challenges and Way Forward
MRO
in
India
July 2022 2 / MRO in India: Trends, Challenges and Way Forward MRO in India: Trends, Challenges and Way Forward / 3 Acknowledgement
The study was carried out with the financial support of NITI Aayog, Government of India, and conducted by Bureau of
Research on Industry and Economic Fundamentals Pvt. Ltd.
The study has benefitted immensely from the guidance and inputs of Dr. V.K. Saraswat, Member, NITI Aayog, Shri
Sudhendu J. Sinha, Adviser, NITI Aayog, Shri Manoj Kumar Gangeya, Director, NITI Aayog and Shri Paras Parekh, Policy
Consultant, NITI Aayog.
Disclaimer
Bureau of Research on Industry and Economic Fundamentals Pvt. Ltd. has received financial assistance under the
Research Scheme of NITI Aayog to prepare this report. While due care has been exercised in preparing this report using
information from various sources, NITI Aayog does not confirm the authenticity of information and accuracy of methodology
to prepare the report. NITI Aayog shall not be held responsible for the findings or opinions expressed in the document. This
responsibility completely rests with Bureau of Research on Industry and Economic Fundamentals Pvt. Ltd.
Maintenance,
Repair &
Overhaul
Trends, Challenges and Way Forward MRO in India: Trends, Challenges and Way Forward / 5
Contents
1. Executive Summary 9
2. Global Aviation Scenario: Key trends 11
3. Maintenance, Repair & Overhaul: An Overview 14
3.1. MRO Segments 14
3.2. MRO Maintenance Checks 16
3.2.1. Nature of Aircraft Maintenance Checks 16
3.2.2. Demand Projections for Various MRO Segments 18
4. The Indian MRO Industry 20
4.1. Overview 20
4.2. Potential of MRO in India 21
4.3. Major Markets and Players 23
4.4. Regulatory Environment 25
4.5. Barriers to Entry 26
4.5.1. Economic and Infrastructural Barriers 26
4.5.2. Labour Issues 27
4.5.3. Licensing and Compliance Issues 27
5. International Best Practices 29
5.1. Case Study: Singapore – The Future Aerospace City 31
5.2. Case Study: Malaysia – From Small Domestic Market to Leaping Beyond Borders 32
6. Challenges Faced by the MRO Industry in India 36
7. Recommendations 42
8. Conclusion 54
Annexure I - List of Stakeholders 57 6 / MRO in India: Trends, Challenges and Way Forward
List of
Abbreviations
and Acronyms MRO in India: Trends, Challenges and Way Forward / 7
AAI Airports Authority of India
AIESL Air India Engineering Services Ltd.
AME Aircraft Maintenance Engineer
APU Auxiliary Power Unit
ASEAN Association of South East Asian
Nations
CAA Civil Aviation Authority, UK
CAGR Compound Annual Growth Rate
CASA Civil Aviation Safety Authority
CMMS Computerized Maintenance
Management System
DER Designated Engineering
Representatives
DGCA Directorate General of Civil Aviation,
India
DOA Design Organisation Approval
EASA European Union Aviation Safety
Agency
EU European union
FAA Federal Aviation Administration, USA
FBO Fixed-Base Operator
FTK Freight Ton Kilometres
GST Goods and Services Tax
GTO Gross Turnover
HAL Hindustan Aeronautics Ltd.
HSN Harmonised System of Nomenclature
IATA International Air Transport Association
ICAO International Civil Aviation
Organisation
IGA Intergovernmental Agreement
IP Intellectual Property
IPC Illustrated Parts Catalogue
ITA Investment Tax Allowance
ITM Industry Transformation Map
LCD Liquid Crystal Display
MIDA Malaysian Investment Development
Authority
MIGHT Malaysia Industry-Government Group
for High Technology
MNC Multinational Corporation
MoCA Ministry of Civil Aviation
MRO Maintenance, Repair and Overhaul
NCAP National Civil Aviation Policy (2016)
OEM Original Equipment Manufacturer
PBH Power by the Hour
PLI Production Linked Incentive
PMA Parts Manufacturer Approval
PPP Public-Private Partnership
R&D Research and Development
RCS Regional Connectivity Scheme
RFI Request for Information
RM Malaysian Ringgit
RoDTEP Remission of Duties and Taxes on
Export Products
RPK Revenue Passenger Kilometres
UAE United Arab Emirates
UDAN Ude Desh ka Aam Naagrik
UK United Kingdom
USA United States of America
USD United States Dollar
USM Used Serviceable Material 8 / MRO in India: Trends, Challenges and Way Forward
1.

Executive
Summary MRO in India: Trends, Challenges and Way Forward / 9
1. Executive Summary
Maintenance, Repair and Overhaul (MRO)
operations play an important role in ensuring
airworthiness and availability of aircrafts for
the commercial and defence aviation sectors.
With a current fleet size of about 713 aircrafts
and more than a 1000 aircrafts planned to be
added in the near future, India is poised to
become the third largest buyer of commercial
planes after US and China. As a consequence
of rising fleet size and conducive government
policies, the Indian aerospace industry has
emerged as one of the fastest expanding
markets globally. Buoyed by an annual
passenger growth of 15% (pre-COVID), the
Indian aviation sector is expected to become
the third largest air passenger market by 2024.
The exponentially rising civil aviation industry,
therefore presents a strong case for the
development of the MRO industry in India.
Although at a nascent stage – the size of the
industry being USD 1.7 billion as of 2021 – it
is expected to reach USD 4.0 billion by 2031,
registering a CAGR of 8.9% as compared to
the global average of 5.6%. Rising consumer
demand, increasing fleet size, favourable policy
interventions and labour arbitrage are some of
the key factors that can potentially fuel growth
and development of MRO services in India.
Further, with a substantial portion of the current
fleet leased, redelivery maintenance contracts
can be seen as an important growth driver to
bolster desired capacity expansion in the Indian
MRO industry.
The aforementioned statistics substantially
validate the potential of India to become a
significant regional MRO hub and gradually
strive to establish its foothold in the global
supply chain. Further, rising demand – as
per predictions for the next decade – makes
the Indian MRO industry an ideal destination
for strategic investors, Original Equipment
Manufacturers (OEMs) and global MRO
players. As far as systemic developments in
the ecosystem are concerned, policy initiatives
such as the MRO Policy 2021, National Civil
Aviation Policy 2016, rationalisation of GST,
removal of Gross Turnover Tax (GTO), etc.
reflect the vision of the government to develop
India as a global MRO hub. However, the
growth of the MRO sector will also depend on
how efficiently and collaboratively India can
address some of the key challenges faced
by MRO players in India. For instance, Indian
MROs face considerable barriers to break
into the existing value chains, involving OEMs,
internationally established MROs and airline
operators. Impediments are also faced with
respect to implementation of offset clauses,
credit accessibility, availability of infrastructure,
licensing and certification, taxes/duties and
land lease rentals to name a few.
Though the Government of India has initiated
an array of reforms, integrating with the global
value chain – in line with the progress made
in other global MRO hubs like Singapore,
Malaysia and Turkey – will be a long-term
process for India. Incremental steps such as
joint ventures with established global MRO
players, focus on MRO segments with lower
IP control (electrical and electronics, avionics,
structural repair, etc.) and a gradual shift
towards the higher end of the MRO value chain
(such as manufacture of landing gears, etc.) is
recommended in order to establish a robust
MRO industry in the country.
India can ensure substantial advancements
by developing a sustainable end-to-end
ecosystem for commercial, general and military
MRO activities. The benefits would potentially
include reduction in foreign exchange outflow,
greater employment opportunities and
augmentation of domestic MRO capability.
Complementary benefits to airline operators
would include lower MRO costs, reduced
turnaround time and less inventories. This
study intends to delve deep into various
aspects influencing the MRO ecosystem in
India, identify the challenges faced by various
stakeholders and finally, outline a roadmap for
near and long term developments in the sector. 10 / MRO in India: Trends, Challenges and Way Forward
2.

Global Aviation
Scenario: Key
Trends MRO in India: Trends, Challenges and Way Forward / 11
2. Global Aviation Scenario: Key trends
1  https://www.bcg.com/en-in/publications/2020/seven-trends-reshape-airline-industry
2  Oliver Wyman
3  https://www.iata.org/en/pressroom/2022-releases/2022-03-01-01/#:~:text=In%202021%2C%20overall%20traveler%20
numbers,2024%20and%20101%25%20in%202025.
4  https://www.researchandmarkets.com/reports/4762307/air-cargo-market-forecast-to-2028-covid-19#:~:text=According%20to%20
the%20new%20research,8.0%25%20from%202021%20to%202028.
For the greater part of the last decade, the
aviation sector has been bolstered by a strong
foundation of positive economic trends,
low unemployment, low inflation and strong
consumer purchasing power. These factors
contributed to the globalization of the middle
class, and the consequent increase in demand
for air travel. On the supply side, low borrowing
rates, growing financial markets and stable
operational expenses made it possible for
airlines, OEMs and service providers to grow
significantly between 2010 and 2019 while still
remaining profitable.
1

However, during the pandemic, the growing
trend of Revenue Passenger Kilometers (RPK)
regressed across all markets, particularly
in mature aviation markets such as Europe
and the United States. Consequently, global
efforts against the pandemic – widespread
dissemination of vaccines, government
stimulus, etc. – and a resultant revival of
travel demand has led to optimistic growth
predictions for global aviation in the coming
decade. The global fleet size, which stands at
27,844 in 2022 is expected to reach 38,189 by
2032 at a CAGR of 2.7%.
2
. Figure 1 depicts
the global fleet forecasts for 2027 and 2032.
Figure 1- Global Fleet Forecast, 2022-2032
Source: Oliver Wyman
Globally, the overall passenger traffic in 2021
was around 47% of the 2019 levels, and
is predicted to improve to 83% in 2022,
94% in 2023, 103% in 2024 and 111% in
2025.
3
Similarly, the air cargo market, which
was valued at USD 130.1 million in 2019,
is expected to reach USD 223.29 billion by
2028, registering a CAGR of 8%.
4
The rise in
fleet size, as a result of increased trade and
passenger movement, is therefore expected to 12 / MRO in India: Trends, Challenges and Way Forward
also increase the demand for MRO services,
as well as components and parts. Out of all the
regions under consideration, the highest rate of
increase in fleet size is predicted for India, with
a growth rate of 113% i.e. from a current fleet
size of about 713 to 1522 aircrafts by 2031 as
shown in Figure 2.
Figure 2 – Fleet Size Distribution by Region
Source: Oliver Wyman MRO in India: Trends, Challenges and Way Forward / 13
3.

Maintenance,
Repair & Overhaul:
An overview 14 / MRO in India: Trends, Challenges and Way Forward
3. Maintenance, Repair & Overhaul: An Overview
5  International Civil Aviation Organization is a specialized agency of the United Nations which acts as a global forum for discussions on safe
and sustainable civil aviation system.
6  ASI Report. 2021
7  Based on stakeholder discussions
The Maintenance, Repair and Overhaul
(MRO) ecosystem comprises OEMs, airline
operators, service providers, vendors and
manufacturers of parts/spares. The MRO
industry is highly regulated and comprises
routine checks, repair and scheduled
replacement of components, and maintenance
during redelivery of an aircraft with the primary
purpose of maintaining ‘airworthiness’ of the
aircraft. These procedures are mandated by
national regulatory authorities, which in turn
are coordinated under international standards
established by the International Civil Aviation
Organization (ICAO)
5
. Some of the key global
players in the MRO market include BAE
systems, Boeing, Airbus, General Dynamics,
Lockheed Martin, Huntington Ingalls, Northrop
Grunman, Raytheon, Rockwell Collins, Saab,
URS Corporation and Elbit Systems.
3.1. MRO Segments
MRO services are categorized into four major
segments – a) Line, b) Components, c) Engines
and d) Airframes. Of these four segments,
Engine and APU maintenance constitute
almost 60% of the total MRO outlay, whereas
component, line and base maintenance form
around 22%, 8% and 10% respectively.
6

Engine and APU maintenance is majorly done
in the USA, as airlines find it more competitive
there as compared to other destinations.
7

Figure 3 provides a brief overview of the four
major segments of the MRO industry. MRO in India: Trends, Challenges and Way Forward / 15
Figure 3 – Types of MRO Segments
Line
Maintenance
Component
Maintenance
Airframe Heavy
Maintenance and
Modification
Engine
maintenance
xPeriodicity:
Carried out during
turnarounds, while
the aircraft is still
in its operating
environment
xRelatively
straightforward
tasks which mostly
involve routine-in-
service inspections,
check actions,
trouble-shooting and
rectifications
xDoes not require
additional
infrastructure
such as hangars,
but limited by the
availability of the
ground support
equipment
xPeriodicity- around
3 months/500-600
hours depending on
the type of aircraft
xAircraft components
such as avionics
units, engine and
landing gear are
inspected in detail
in a specialist shop,
after being removed
during various
checks
xA Component
Maintenance Manual
(CMM) is referred to
understand the tasks
that are required
for a particular
component in order
to restore it back to
serviceable state
xPeriodicity:
As mandated,
depending on
aircraft type; involves
removal of an aircraft
from service, for a
period ranging up to
30 days
xOccurs in a hangar
with specialised
tools, involving time
consuming tasks
such as ‘C’ and ‘D’
checks
xGenerally includes
structural
work, corrosion
prevention, interior
refurbishment and
replacement of major
components
xPeriodicity- Around
12-18 months/5000
hours, depending on
the type of aircraft
xInvolves repair,
service and
inspection of the
aircraft engines
to maintain
airworthiness and
meet international
standards
Source: SKYbrary, Primary Information
Out of the above-mentioned segments,
airframe maintenance is labour-intensive in
nature, with labour cost occupying upto 80%
of the total cost incurred during an aircraft’s
maintenance. On the other hand, engine
maintenance is extremely capital-intensive, with
a major portion (~80%) of the overall cost being
occupied by the cost of spares. In component
MRO services, labour cost and cost of spares
occupy 45% and 55% of the overall cost
respectively. The approximate share of labour
and spares cost of major MRO segments has
been depicted in Figure 4. 16 / MRO in India: Trends, Challenges and Way Forward
Figure 4 – Labour and Spares Cost Distribution of MRO Components
Source: FICCI
3.2. MRO Maintenance Checks
3.2.1. Nature of Aircraft Maintenance Checks
A key aspect of aircraft maintenance is the
nature and periodicity of various checks that an
aircraft go through. Although different aircrafts
may require maintenance checks at different
intervals depending on OEM guidance and
domestic regulations, an overall understanding
of the various checks is imperative. Table 1
provides a general overview of the maintenance
checks required. MRO in India: Trends, Challenges and Way Forward / 17
Table 1 – Description of Scheduled and Unscheduled Maintenance Checks
Type PeriodicityCompletion TimeDescription
Unscheduled Maintenance checks
Pre-flight checkPrecedes every flight 15 to 60 minutes
depending on the aircraft
type
It involves an inspection of the aircraft by the cockpit crew
and mechanics.
Ramp checkCarried out on a daily
basis
35 man-hours Mechanics check the aircraft’s individual functions, inspect
the tyres and brakes, and refuel the oil and hydraulic fluids.
The aircraft is also subjected to a visual check, both outside
and inside the cabin.
Service checkCarried out on weekly
basis
55 man-hours The ramp inspection is combined with chores like topping
up the water, air and oil, as well as a full cleaning of the
cabin.
Scheduled Maintenance Checks
A-level check350-750 flight hoursBetween 45 to 260 man-
hours
It is labour intensive and involves a visual examination of the
airframe, powerplant, avionics and accessories to ensure
general conditions of the aircraft.
B- level checkaround 750 flight
hours
About 200 man-hoursIncludes A check plus operational check, fluid servicing
and lubrication as well as open inspection of panels and
cowlings.
C-level checkHappens every 18
months to 2 years
depending on the type
of aircraft
Between 1,500- 2000
man-hours
Detailed maintenance work is carried out, that entails
thorough inspections inside and outside, along with
meticulous examination of structures (load-bearing
components on the fuselage and wings) and functions.
Engine repairPerformed in aircrafts
which have had
12,000 hours in
the air and flown a
distance of almost 10
million kilometres
Aircraft engines are put under a lot of strain. Thus, every engine in a four-engine wide-
body jet like the Airbus A380 may provide up to 34 tonnes of thrust. When such massive
forces are at work, continuous inspection and maintenance are required to ensure the
required level of reliability.
Landing gearCarried out within 8 to
10 years
3 to 5 days To ensure that the jolt of a very bad landing can be reliably
withstood without any problems, maintenance of landing
gears is highly essential.
Intermediate
Layover (IL)
Performed every 3 to
5 years
About 2 to 4 weeksA number of large assemblies, such as the high-lift devices,
are disassembled to allow easier access to the fuselage and
wing structure for inspection. Several pieces of equipment
and systems are tested and fixed at the same time. Cabin
components such as seats, galleys and toilets are also
overhauled, and the aircraft may be repainted if necessary.
D-level checkPerformed every 6 to
10 years
About 30000 to 50000
man-hours
The entire plane is practically dismantled and reassembled.
Everything in the cabin is disassembled (seats, toilets,
galleys, overhead bins) so engineers may examine the
aircraft’s metal skin from the inside out. All of the aircraft’s
systems are removed, inspected, repaired or replaced, and
then reinstalled. Each D check is worth several millions of
dollars.
Source: A metaheuristic approach for solving the airline maintenance routing with aircraft on ground problem (2014)
8

8 A Metaheuristic Approach for Solving the Airline Maintenance Routing with Aircraft On Ground Problem (https://www.researchgate.net/
publication/271466255) 18 / MRO in India: Trends, Challenges and Way Forward
Cost Estimates for Various Maintenance Checks
#
Unscheduled Checks
Pre-flight Check : In-house Tariff of Airlines
Ramp Check : In-house Tariff of Airlines
Service Check : In-house Tariff of Airlines
Scheduled Checks
A-level Check : USD 50,000
B-level Check : USD 75,000-100,000
C-level Check : >USD 350,000
Engine Repair : >USD 1 Million
Landing Gear : USD 375,000
Intermediate Layover : USD 300-600
D-level Check : >USD 1 Million
#
As per stakeholder interactions
3.2.2. Demand Projections for Various MRO Segments
9  Oliver Wyman, 2021, BRIEF Analysis
The MRO industry is expected to achieve
robust growth in the near future, owing to
augmented demand. Global MRO demand is
positively correlated with fleet size. Therefore,
with consistently increasing fleet size, a surge
in MRO demand is foreseeable in the near
future. Figure 5 depicts the predicted segment-
wise MRO demand till 2031. The global MRO
demand is expected to reach USD 117 billion
by 2031 – an increase of 70% – from USD
68.5 billion in 2021. Out of the four segments,
engine MRO is predicted to display the highest
growth of about 93%
9
, and therefore, becomes
a focus area for both established and emerging
MRO markets.
Figure 5 - Global Annual MRO Demand Prediction by Segment
Source: Oliver Wyman, 2021
#
As per stakeholder interactions MRO in India: Trends, Challenges and Way Forward / 19
4.

The Indian MRO
Industry 20 / MRO in India: Trends, Challenges and Way Forward
4. The Indian MRO Industry
4.1. Overview
10 https://pib.gov.in/PressReleasePage.aspx?PRID=1638887ed
11 https://timesofindia.indiatimes.com/blogs/voices/india-flying-high/
12 IBEF, Aviation Industry Overview
13 https://timesofindia.indiatimes.com/business/india-business/india-set-to-become-third-largest-buyer-of-passenger-planes/
articleshow/58937405.cms
14 https://www.spsairbuz.com/story/?id=691&h=MRO-Progress-in-India
India’s civil aviation industry, with a market
size of USD 900 million
10
, has become one
of the country’s fastest expanding industries
with a high growth curve. The principal drivers
of this growth have been an expanding fleet
size and favorable policy interventions. India
is the world’s third largest domestic aviation
market – with a domestic traffic of 275 million
11

– and is expected to surpass The United
Kingdom (UK) to become the third largest air
passenger market – including both international
and domestic passengers – by 2024.
12
The
combined air passenger traffic stood at around
341 million (5th largest in the world) in FY 2020,
with an annual passenger growth of 15%
(pre-COVID). The Indian civil aviation industry
has been the centerpiece of the development
of MRO Industry in the Asia Pacific region and
is projected to depict a substantial growth of
9.1% by 2031. India currently has a fleet size
of 713 commercial aircrafts and is poised to
become the 3rd largest buyer in the world with
an order book of more than 1000 commercial
aircrafts according to a report by Centre for
Asia Pacific Aviation (CAPA), an independent
think tank.
13
In India, airlines spend around 12 to 15% of
their overall revenues on maintenance, which
becomes the second most expensive item after
fuel (45% of operating expenses). In general,
airline operators in India perform on-tarmac
inspections (A and B checks) in-house and
outsource engine, heavy maintenance (C and
D checks) and modification work to third-
party MROs. Engine and component repairs
account for over 60%-70% of MRO costs, and
the remaining 30-40% is spent on airframe
maintenance. Of the two, Indian MROs are
competent in performing airframe maintenance
whereas engine and component MRO services
are procured from abroad. Further, there is no
major helicopter MRO facility in India except
for Pawan Hans and Hindustan Aeronautics
Limited (HAL). Helicopter MRO services is
therefore a significant business opportunity with
considerable potential for the future.
14
India’s MRO
Market in
2021
India’s MRO
Market in
2031
4
Bn
CAGR
8.9%
1.7
Bn MRO in India: Trends, Challenges and Way Forward / 21
The market size of the MRO sector in India
stood at USD 1.7 billion in 2021, which is
expected to reach USD 4.0 billion by 2031
15
,
registering a CAGR of 8.9% as compared
to the global average of 5.9%. The import of
MRO services (2019-20) by airlines in India
stood at USD 1.26 billion
16
, sourced mainly
from countries like France, Sri Lanka, Germany,
15 https://www2.deloitte.com/content/dam/Deloitte/in/Documents/finance/in-fa-MRO-in-India-Poised-to-take-off-noexp.pdf
16 https://www.civilaviation.gov.in/sites/default/files/annual-report-2019-2020.pdf
17 Ibid.
Jordan, Malaysia, Singapore, Turkey, United
Arab Emirates and the USA. The MRO market
size is estimated to reach to around USD 2.8
billion in the next five years, with a considerable
share being procured from domestic MROs
17
.
Figure 6 provides a comparative analysis of the
annual growth rate of the MRO sector in India
vis-à-vis other key countries/regions.
Figure 6 – Annual MRO Growth (in %) by Region for 2021-2031
Source: Oliver Wyman, 2021
4.2. Potential of MRO in India
Some of the factors which are expected to
provide necessary fillip to the Indian MRO
industry have been described in detail below:
Rising demand as a result of growing
fleet size – MRO demand in India is
anticipated to grow at a much faster rate
than the rest of the world, thereby entailing
attractive investment opportunities for
domestic as well as foreign investors, OEMs
and leading MROs across the world. Various
domestic and foreign investors could also
consider investing in the MRO sector in
India by way of alliance and collaboration. To
cite a few examples, the MoU between Air
India Engineering Services Ltd. (AIESL) with
Pratt & Whitney – to launch a joint engine
MRO facility in Mumbai – and the venture
between Wadia group and SIA Engineering
Company have been key developments in
the sector. Such developments make way for
a competitive MRO sector, which promises to
provide India a strong operational ecosystem
for both domestic and international players. 22 / MRO in India: Trends, Challenges and Way Forward
Availability of low cost, English speaking
diverse pool of engineers – India is
globally recognized for its strong engineering
curriculum. This holds true for the MRO
industry as well, wherein the scope of
benefitting from a strong and competent
workforce is considerable. One of the most
significant benefits that India provides to the
rest of the world is the availability of highly
qualified engineers with the capability of
being trained for an array of technical MRO
activities. Another important reason that
puts India on the map for MRO activity is
its cost advantage. Labour cost – which
forms a considerable share of overall cost in
airframe and component maintenance – is
comparatively lower in India, thereby ensuring
higher labour arbitrage as compared to
global counterparts.
Prevalent sale and lease – back model
providing a large scope for redelivery
maintenance services – Redelivery
maintenance is an important aspect of an
airline and lessor’s MRO requirements,
especially in India, where the sale-and-
lease-back model is common. This is a big
opportunity for component repair as well as
heavy maintenance. Due to several legal and
technical restraints, this is currently done
largely outside India.
Figure 7 – Primary and Secondary Advantages of a Flourishing MRO Market in India
Secondary AdvantagesPrimary Advantages
Addressing MRO demand of the
increasingly growing Indian fleet
Economic benefits such as lower costs,
reduced turnaround time, less
inventories, etc.
Addressing MRO demand of global fleet
and competing with the MRO players in
the Asia-Pacific (Middle East, South Asia
and South-East Asia)
Reduction in foreign exchange outflow
Employment generation
Incresed revenue and investments
The Indian MRO sector can potentially ensure
several primary and secondary benefits for the
aviation industry. The primary advantage of a
flourishing Indian MRO sector will be to address
the increasing MRO demand of the Indian fleet
as a consequence of the growing size. Post
establishing foothold in the Indian aviation
industry, Indian MRO players can potentially
switch to global markets and compete with the
established players in South and South-East
Asia as well as other international MRO hubs.
A well-established MRO industry in India will
not just have the aforementioned advantages,
but would also create win-win situations
for all the stakeholders involved. Apart from
reduction in foreign exchange outflow, and
other benefits such as employment generation,
manufacturing of components and spares
within the country would be bolstered. Increase
in indigenous capacities would subsequently
ensure overall economic growth and faster
turnaround time while creating a sustainable
end-to-end eco-system for commercial,
general and military aviation. MRO in India: Trends, Challenges and Way Forward / 23
4.3. Major Markets and Players
Figure 8 – Key Players in the Indian MRO Market
Air India Engineering Services Ltd.
Deccan Charters Ltd.
Air Works India (Engineering) Pvt. Ltd.
Indamer Aviation Pvt. Ltd.
Max MRO Pvt. Ltd.
Bird ExecuJet
Taj Air
GMR Aero Technic Ltd.
The MRO market in India can be primarily
categorized into five regions i.e. Delhi,
Mumbai, Bangalore, Chennai and Kolkata. The
segments these markets majorly cater to and
the role of leading players in these regions have
been summarised in Table 2. 24 / MRO in India: Trends, Challenges and Way Forward
Table 2 – MRO Infrastructure and Region-wise Expertise of Key Players in the Industry
RegionCompetencies (MRO Segments)Expertise of Key Players
Bengaluru xAirframe
xComponent
xAir Works India’s facility in Hosur, which specializes
in airframe repair of Airbus 320s, Boeing 737s and
ATR42/72 turboprops
xAir India Engineering Services Ltd. (AIESL) facility in
Thiruvananthapuram specializes in airframe checks,
wheel and brake overhauls and maintenance of Boeing
737s
Chennai xAirframe
xComponent
xGMR Aero Technic and SpiceJet Technic caters to
the airframe segment of Boeing 737s, Airbus A320s,
ATR42/72s and Bombardier Q400s
xTurbo Jet Engines Private Limited (Telangana) and
SpiceJet Technic provides component MRO services
for Airbus A320s, Boeing 737s and ATR42/72s
Kolkata xComponent (with emphasis on propeller
overhaul and repair)
xArrow Aviation Services Private Limited (New Delhi),
NSCB Aviation Private Limited (Kolkata), and the
Aerospace Research and Development Center in
Guwahati are some players specializing in component
MRO
xAIESL provides services in airframe inspections for
A319 and A320, component overhaul for auxiliary
power units for A320 series, high-flow pneumatic
components, and provides fuel accessories
Mumbai xAirframe
xComponent
xEngine
xAir Works (for A320, Boeing 737, and ATR42/72
fleet types) and AIESL (for Airbus A330 and Boeing
737/777/747/787) specialize in airframe MRO
xAIESL provides component overhaul for Boeing 777,
787, 747 and 737 fleets.
xAIESL also provides engine overhaul for
PW4056/4152, CF6680C2, CFM56-7B and GE90
Delhi xAirframe
xComponent
xEngine
xBird Execujet Airport Services Private Limited and
AIESL dominate the airframe and engine MRO
categories
xInterglobe Aviation Private Limited and Indamer Aviation
are two major participants in component MRO activities
xAIESL provides maintenance and repair services for
Airbus A330 and Boeing 737 aircrafts; it also conducts
engine overhaul for the IAE V2500, JT8D and CFM56-
5B engine versions
Source: Primary research, company websites
18 The Directorate General of Civil Aviation is a statutory body of Government of India to regulate civil aviation in India.
Apart from the above mentioned key industry
players, DGCA
18
has also approved 40
overseas entities to conduct MRO on Indian-
registered aircrafts. MRO in India: Trends, Challenges and Way Forward / 25
4.4. Regulatory Environment
19 The MRO policy document has not been released yet for public access by the Ministry of Civil Aviation.
With the vision to make India a global MRO
hub, the Government of India has introduced
several policies and regulations to bring India’s
MRO sector at par with the global markets.
The government has taken several steps to
encourage companies to set up MROs in India,
including lowering the Goods and Services Tax
(GST) on domestic MRO services from 18%
to 5% with full Input Tax Credit from 1st April
2020, treating transactions sub-contracted
by foreign OEMs and MRO companies to
domestic MROs as exports with zero-rated
GST, waiving custom duty on tools, toolkits
and spares imported by MROs, and permitting
100% Foreign Direct Investment (FDI) through
the automatic route, among others.
To attract more investments, the Ministry of
Civil Aviation announced a new MRO Policy
in 2021 which includes key reform measures
such as land leasing through open tenders and
the abolition of the AAI’s royalty. Additionally,
instead of the existing short-term period of
3-5 years, land allotment for establishment of
MRO facilities is expected to be for 30 years.
19

Some of the policies and regulations that have
been framed to facilitate systemic and strategic
developments to make India a global MRO hub
have been discussed in Figure 9.
Figure 9 – Key Policy Interventions for MRO Industry in India
National Civil Aviation Policy (2016)
Vision 2040 Document (Ministry of Civil Aviation, 2019)
Defense Acquisition Procedure (DAP), 2020 for Defense MRO industry
To enable 300 million domestic ticketing by
2022 and 500 million by 2027 along with
international ticketing to the tune of 200
million by 2027
MRO service companies to be exempt from
airport royalty and extra costs for five years
MROs no longer expected to provide proof of
their client’s demand for parts or orders
Extension of duty-free component imports for
MRO from one to three years
Provision for airlines to claim a set-off on the
5% GST of MRO performed outside India
Permission for foreign aircrafts to visit India
for MRO for a six-month term instead of the
erstwhile 15-day time period
To make India a global MRO hub
servicing 90% of the Indian carriers’ MRO
requirements
To mandate at least 20% of the Indian MRO
industry’s income from foreign-registered
aircrafts
To ensure that nearly 90% of re-delivery
maintenance take place in India
At the Request for Information (RFI) stage,
potential foreign vendors to be asked
if they are willing to progressively start
manufacturing and build a local ecosystem at
the spares/sub-component level
Introduction of a new Buy (Global –
Manufacture in India) category to conduct
outright purchase of equipment from
foreign vendors, followed by indigenous
manufacturing of the entire/part of the
equipment, as well as spares/assemblies/
sub-assemblies/maintenance, repair and
overhaul (MRO) facility for an equipment,
through subsidiaries in India, joint ventures,
Indian Production Agencies, etc.
Advocacy of co-production through Inter-
Governmental Agreements (IGA) as a way
to decrease life cycle cost through import
substitution i.e. production of equipment,
spares, sub-assemblies, etc. in India 26 / MRO in India: Trends, Challenges and Way Forward
4.5. Barriers to Entry
Despite persistent efforts by the government,
there are pertinent problems that a new entrant
might face in the MRO industry, some of which
have been elaborated in the Figure 10.
Figure 10 – Barriers to Entry for New Entrants in the MRO Market
Economic and
Infrastructural Barriers
Labour Issues
Licensing and
Compliance Issues
Competing against already
established international
players in terms of scale
Large initial capital
expenditure for facilities,
personnel training,
components, marketing, etc.
Apprehension amongst
MRO customers towards
incurring switching costs
Information asymmetry
as a consequence of
control of information, data
and manuals by OEMs/
manufacturers
Brain drain - Fewer
availability of jobs within the
country compulses skilled
personnel to seek jobs
outside the country
Lack of training
infrastructure for human
capital devlopment
Getting FAA/EASA licences
as DGCA licenses and
regulations have limited
recognition in the global
markets
Intense FAA/EASA audits of
MRO provider’s documents,
processes, stores, AME
licensing, stock referring
and parts issued or fitted
in the aircrafts, etc., which
are lengthy and logistically
cumbersome processes
4.5.1. Economic and Infrastructural Barriers
Economies of scale – Economies of scale
refer to the cost advantage derived due to
reduction in fixed cost per unit of output,
as output increases. The economy of scale
advantage discourages entry of new MRO
suppliers, requiring new entrants to choose
between entering on a large scale and risking a
strong reaction from established enterprises, or
entering in small capacity and accepting a cost
disadvantage, both of which are undesirable
options.
Capital Requirements – Capital requirements
are major hurdles which entail significant
upfront expenditure in facilities, personnel, initial
advertising, R&D and equipment for new MRO
facilities.
Switching Costs – Switching costs are the
costs incurred by MRO customers as a result
of switching suppliers. These costs include
retraining staff in the new firm’s procedures,
additional location expenditures and the
rebuilding of business relationships. Because
of the complexity and variety of specialized
airframes and components, switching to new
suppliers can result in hefty expenditures for
the customers. MRO in India: Trends, Challenges and Way Forward / 27
4.5.2. Labour Issues
Brain Drain – The non-availability of
experienced engineering, design and technical
manpower in India is frequently emphasized.
Because there are fewer jobs and industries
available, there is a massive brain drain of
skilled personnel out of the country. However,
there have been increased efforts by the
government lately, to improve the aerospace
industry as a whole. The overall growth of the
Indian MRO sector will create job possibilities in
India and may encourage reverse migration.
4.5.3. Licensing and Compliance Issues
Non-recognition of DGCA standards by
European authorities has been a challenge
for new entrants in the Indian MRO industry.
Indian MROs must obtain EASA approval for
European Union registered aircrafts, even if
they have DGCA and FAA approvals. Moreover,
the EASA approval becomes expensive for
Indian MROs owing to associated inspection
costs. 28 / MRO in India: Trends, Challenges and Way Forward
5.

International
Best Practices MRO in India: Trends, Challenges and Way Forward / 29
5. International Best Practices
Global hubs such as Singapore, Malaysia,
UAE (Dubai), Turkey, etc. have established
themselves as consistent and reliable players
in MRO services. This has been achieved
due to various factors such as persistent
government efforts to create viable business
ecosystems, availability of cost-efficient and
skilled labour, favourable taxation policies,
geographical location and competitive pricing
to name a few. Therefore, at this juncture, it is
imperative to understand the key factors that
catalysed the growth of MRO in these regions.
Table 3 highlights country-specific policies and
challenges to provide necessary clarity on the
measures which led to the remarkable growth
in MRO activities in key hubs in the Asia-Pacific
region. 30 / MRO in India: Trends, Challenges and Way Forward
Table 3 – Key Characteristics and Interventions by Global MRO Hubs
Country Key Characteristics
and Conducive Policies
Tax Incentives Challenges
UAE
xState of the art infrastructure facilities for MRO
services
xGeographical advantage
xTechnology transfer and training by established
OEMs to MRO players
xPresence of global MRO players and OEMs
leading to increased competition
xEstablishment of
free trade zones
x5-15 years of tax
holidays
xExemption from
import duties on
goods brought
into free trade
zone
xShortage of
indigenous skilled
labour
Singapore xHome to the largest MRO base in Asia
xHigh concentration of aerospace industry
xPresence of big industry players such as Rolls
Royce and Airbus
xSIA Engineering Company and ST Engineering
(the world’s largest MRO supplier) are local
heavyweights
xProvision for complete nose-to-tail services,
catering to engines, components and avionics
xLow custom duty and logistic cost
xCo-investment program to invest with global
companies along with local enterprises in joint
ventures and strategic projects
xUsage advanced technologies like drones for
aircraft inspections and data analytics
x5 -15 years
corporate tax
exemption
xAdditional
corporate tax
deduction of not
less than 5% up
to 10 years
xLimited space for
new MRO facilities
Malaysia xSecond largest MRO market in South-East Asia
xLower cost of labour compared to Singapore
xMore space for MRO facilities
xPublic Private Partnerships
xInvestment in niche technological capabilities
throughout the value chain
xGrant support to Malaysian owned businesses
for technology acquisition, R&D and conformity
with international standards
xAggressive advertising operations abroad
x10 years
corporate tax
exemption
x100% Investment
Tax Allowance
(ITA)
xStill developing
supply chain for
aircraft parts
xHigher labour cost
as compared to
countries such as
Thailand
Thailand xLower cost of labour compared to Singapore
and Malaysia
xStrategic location for MRO facilities
xStrong automotive parts and petrochemical
supply chain that can develop into aircraft parts
industry
xGrowth in logistics and tourism industries
x12 years
corporate tax
exemption
x17% personal
income tax for
foreign experts
(lowest rate in the
ASEAN region)
xRelatively low level
of R&D
xLimited supply
chain for aircraft
parts MRO in India: Trends, Challenges and Way Forward / 31
Philippines xPhilippines’ Investment Priority Plan includes
manufacturing of industrial goods, machinery
and equipment, including parts, components
and other MRO-related services within the
country
xTo boost skill development, Philippines has also
established a Technical Education and Skills
Development Authority
xImport of
production
equipment and
machinery, spare
parts and other
components are
tax- and duty-free
xInfrastructure at
Manila airport is
limited
xRegional
competition
from established
markets
5.1. Case Study: Singapore – The Future Aerospace City
25% of Asia’s MRO
market
10% of the Global MRO
market share
MRO occupies 90% of
the country’s aerospace
sector
Overview – Singapore, Asia’s largest market,
has established itself as one of the world’s
leading MRO centers, and it is already known
as the “Future Aerospace City.” Rolls Royce
and Airbus, for instance, have a long-standing
and considerable presence in Singapore. SIA
Engineering Company and ST Engineering
(the world’s largest MRO supplier) are among
the local heavyweights that are continuing to
grow their activities. Singapore has a broad
and diversified aerospace ecosystem that
caters to engines, components and avionics for
complete nose-to-tail services, with over 130
aerospace businesses active in the country.
Singapore’s market supremacy has recently
been challenged by emerging destinations
such as Thailand, Malaysia and the Philippines.
However, they compete mostly on the basis
of cheap labour costs. Singapore has a highly
efficient workforce that generates high-quality
work, which helps to counterbalance the
premium on labour costs.
Due to a strong ecosystem marked by efficient
customs, great connectivity and state-of-
the-art infrastructure, the overall MRO cost in
Singapore is highly competitive. Because of the
significant concentration of varied companies in
the aerospace industry, the domestic market is
heavily stacked with essential support sectors
which have the capability to absorb a wide
range of subcontracting work.
Policy Support – The MRO sector in
Singapore is built on a solid foundation of
forward-thinking legislative support, cutting-
edge research and innovation and a home-
grown talent pool — attributes that are rare in
other competing nations. In January 2018, the
government unveiled the Aerospace Industry
Transformation Map (ITM), which intends to
grow the aerospace industry by focusing on
operational excellence, emerging technology
innovation and talent development. The
results of these important reform measures
can be seen in the progressive advancements
achieved in MRO operations in the recent
times.
Infrastructural Support – The Singapore
government, Rolls-Royce and SIA Engineering
have spent up to USD 60 million in a
collaborative laboratory to work on advanced
manufacturing technologies such as 3D
printing and robotics. ST Aerospace is using
data analytics to provide innovative solutions
to their clients, such as predictive maintenance
and inventory management. Drones are also
being used by the corporation for improved 32 / MRO in India: Trends, Challenges and Way Forward
aerial aircraft inspection and developing
spare parts using additive manufacturing
processes to save time and resources. To
equip Singaporeans with necessary skills in
the aerospace sector, the government has
implemented initiatives such as the Skills
Framework for Aerospace and the Skills Future
Enhanced Internship Initiatives.
20 https://www.mida.gov.my/wp-content/uploads/2021/07/Aerospace-High-Ress-Final-2021.pdf
21 https://www.miti.gov.my/miti/resources/8._Aerospace_Industry_.pdf
22 Ibid
23 https://www.mida.gov.my/mida-news/mida-welcomes-more-oems-tier-1-firms-to-aerospace-sector-2/
Achievements – The longstanding presence
of global MROs, efficient workforce, adequate
infrastructure, technological innovations and
supportive legislation have created a broad
and diverse ecosystem in Singapore to provide
nose-to-tail services, thus placing it amongst
the leading MRO service providers across the
globe.
5.2. Case Study: Malaysia – From Small Domestic Market to
Leaping Beyond Borders
Overview – The Malaysian aerospace industry
had a small base and catered mostly to the
domestic market. In the last two decades,
it has grown to become the second-largest
market in South-east Asia.
20
Faced with
intense competition from established regional
competitors such as Singapore, Vietnam
and Thailand, Malaysia has constructed
an innovative industry environment to drive
competitiveness. At the outset, the national
policy initiatives, centered on investment,
trade, workforce development, infrastructure
development and the creation of public-
private platforms (which identified upgrading
opportunities in the aerospace GVC and
spearheaded coordinated responses involving
industry, government and educational
institutions). The aerospace industry of
Malaysia took off with the launching of the
National Aerospace Blueprint in 1997, which
charted a comprehensive development plan
to transform the country into a dynamic
international aerospace player by 2015.
21

Subsequently, an array of systemic reforms
have been undertaken to fuel the growth of
the aerospace industry through the creation of
defining competitive advantages in the areas of
governance, taxation, R&D, etc. among others.
Policy Support – Following the National
Aerospace Blueprint of 1997, the Malaysia
Aerospace Industry Blueprint 2030 was
launched in 2015 during the Langkawi
International Maritime & Aerospace Exhibition
2015 (LIMA ’15). The Blueprint has set a vision
for Malaysia to become the leading aerospace
nation in South-east Asia – and an integral part
of the global market by the year 2030 – with
an annual revenue of RM 55.2 billion and more
than 32,000 high-income jobs.
22
By 2030, the
industry is projected to churn out RM 20.4
billion from MRO operations, RM 21.2 billion
from aero-manufacturing, and RM 13.6 billion
from engineering and design services.
23
Malaysia is targeting to capture 50% of the
South-east Asian MRO business and 5%
of the global market by 2030. It aims to
achieve the same by developing an Industry
4.0 Technology Roadmap, expanding MRO
activities for business jet, attracting investments
from new Fixed Based Operators (FBO) and
developing a leading regional helicopter MRO
business. This will position the country as
South-east Asia’s top aerospace hub.
Trade and Investment Incentives –
Malaysia has granted the aerospace industry
a comprehensive trade and investment
incentive package since 2003. The incentives
are aimed at the entire value chain, including
design, production and assembly, operator MRO in India: Trends, Challenges and Way Forward / 33
groups as well as maintenance and repair
services. Allowing 100% foreign ownership, the
incentive package includes a 100% income tax
exemption for a period of 5-15 years, a 60%
investment tax credit and a double deduction
on training expenses made by employers.
In addition, raw materials, components,
machinery and equipment, spares and
consumables are exempt from import duty
and sales tax for aircraft enterprises engaged
in MRO activities. Further, to complement
these incentives, the Malaysian Investment
Development Authority (MIDA) has conducted
aggressive advertising operations abroad.
Nudging the domestic firms – Grant support
for local firms was included in the investment
incentives, which were exclusively targeted at
Malaysian-owned businesses. The Domestic
Investment Strategic Fund was created for this
purpose in 2012.
Further, matching (1:1) grants have been
provided to Malaysian-owned businesses for
technology acquisition, R&D and conformity
with international standards. In general, the
initiative has aimed to improve the capabilities
of local firms, so that they can take advantage
of the upgrading opportunities offered by the
outsourcing MNCs.
Sector Strategy and Institutional Building
– The Malaysia Industry-Government Group
for High Technology (MIGHT) was founded in
the mid-1990s as an industry-driven non-profit
organisation tasked with bringing industry
stakeholders, government and the academia
together. Although this group succeeded
in establishing a stakeholder platform, the
achievement of upgrading objectives was
dependent on top-level decision-making. In
2001, the Malaysian Aerospace Council was
established to ensure the latter. This council,
which was chaired by the Prime Minister – and
included representatives from the six relevant
ministries, the aerospace industry and MIGHT
as the secretariat – served as a national level
steering body that systematically charted policy
priorities and implementation strategies to
upgrade the MRO industry in Malaysia.
Human Capital Development – MIGHT’s
industry connections aided in the development
of education and training programmes that
aligned with industry improvement strategies. A
consortium of 11 Malaysian public institutions
was formed in 2002 to address the human
resource needs of the aerospace and
other high-tech industries. This nationwide
programme laid the groundwork for more
focused and targeted relationships with
businesses to fill talent gaps in niche areas.
Achievements – Cohesive policies and
continuous government support has aided
the evolution of Malaysia as one of the leading
MRO service providers in Asia, despite facing
intense competition from already established
MRO destinations in the Asian region such as
Singapore. 34 / MRO in India: Trends, Challenges and Way Forward
Figure 11: Key Practices in Select MRO
Destinations and Key Takeaways for India
Develop necessary ecosystem (infrastructure,
regulatory support, etc.) to attract global players
Establish a nodal agency under government to
ensure coordination with local MROs
Prioritise investments in the MRO sector
Initiate longstanding partnerships with major
international MROs
Diversify MRO services and provide end-to-end
solutions
Optimise tax exemptions on parts and
components
Facilitate R&D, technological innovation as well
as technology transfer
Strengthen skill development initiatives as well
as create jobs for local talent pool
Create a robust work environment for the
indigenous workforce as well as foreign experts
Facilitate growth in the supply chain including
MRO suppliers/clusters, support sectors, etc.
Create a digitized data repository and develop
advanced data analytics
Key Practices in
Select MRO Destinations
Established Markets
UAE (Dubai)
xDevelopment of facilities to function as a workstation
for major players
xPartnerships with major MROs
xTechnology transfer and training
xCreation of jobs
Singapore
xLongstanding presence of global MROs
xHome of leading MRO suppliers
xBroad and diversified ecosystem covering nose-to-tail services
xEfficient workforce (homegrown talent pool) generating high
quality work
xAdequate infrastructure and connectivity
xSupport sectors for sub-contracting
xForward thinking legislative support
xEfficient R&D/technological innovation
xInvestments in innovative solutions including data analytics,
drones for aircraft inspection, etc.
xGovernment initiatives for skill development
Emerging Markets
Malaysia
xBlueprint for development
xNodal agency under government
xCooperation between government and local players
xIncentives for R&D
xParticipation of local companies in government procurement
xClustering based on strengths
xData repository for demand-supply monitoring
Thailand
xTax exemptions
xLow personal income tax for foreign experts
xLow labour cost
xGrowth in logistics
Philippines
xTax exemptions
xPrioritized investments in MRO services
xThrust on skill development
Key Takeaways
for India MRO in India: Trends, Challenges and Way Forward / 35
6.

Challenges
Faced by the MRO
Industry in India
Develop necessary ecosystem (infrastructure,
regulatory support, etc.) to attract global players
Establish a nodal agency under government to
ensure coordination with local MROs
Prioritise investments in the MRO sector
Initiate longstanding partnerships with major
international MROs
Diversify MRO services and provide end-to-end
solutions
Optimise tax exemptions on parts and
components
Facilitate R&D, technological innovation as well
as technology transfer
Strengthen skill development initiatives as well
as create jobs for local talent pool
Create a robust work environment for the
indigenous workforce as well as foreign experts
Facilitate growth in the supply chain including
MRO suppliers/clusters, support sectors, etc.
Create a digitized data repository and develop
advanced data analytics 36 / MRO in India: Trends, Challenges and Way Forward
6. Challenges Faced by the MRO Industry in India
Despite inherent advantages such as
growing passenger traffic and considerable
fleet size, Indian MRO sector has not seen
a corresponding growth, owing to certain
key bottlenecks. This section highlights
the infrastructure related, operational and
regulatory issues faced by the sector currently.
Post-pandemic
Demand-Supply
Mismatch
Licensing and
Certification Issues
OEM/Manufacturer’s
Aftermarket
Monopoly
Duty, Tax
and Royalty Issues
Infrastructural
Issues
Lack of
Access to Credit MRO in India: Trends, Challenges and Way Forward / 37
Increased OEM/manufacturer aftermarket
presence: The increased presence of OEMs in
the aftermarket has been a regular occurrence
in the MRO business for several years. The
OEMs’ ability to quickly capture market share
in the aftermarket is largely due to their control
over Intellectual Property (IP) related to training
manuals, data design, etc. This adversely
affects engine and component manufacturers
and poses a serious challenge to the vision of
an indigenous MRO industry in India.
Secondly, OEMs charge exorbitant consultancy
fees that restricts MRO players to diversify and
expand their services.
24
Further, there has been
a sharp increase in the price of parts, which
MRO players mostly attribute to annual OEM
material price increase and the restrictions
OEMs have placed on the direct sale of OEM
designed parts because of their IP ownership.
A close study of these aspects indicate that
this pattern is likely to continue. According
to an Oliver Wyman survey, most executives
believe that OEMs will continue to expand by
putting more usage restrictions on current IP
and licensing
25
.
Some OEM practices which create entry
barriers for independent MRO players include:
1. Independent MRO operators cannot
compete without reasonable access to
necessary data.
2. Unavailability of maintenance manuals/
instructions for independent MRO
operators severely affects operational
viability.
3. Charging below list prices for components
for OEM’s MRO affiliates but higher list
prices for independent MRO operators
impacts competitiveness. Moreover, OEMs
get into long-term (greater than 5-year)
contracts – with built-in, below-list pricing
24 Based on stakeholder consultations
25 https://www.oliverwyman.com/content/dam/oliver-wyman/v2/publications/2018/april/MRO-Survey-2018-web.pdf
26 Based on stakeholder interactions
27 Ibid.
for parts and caps on price increase
despite surge in inflation – in order to
entice operators. This makes it practically
impossible for independent MROs and
distributors to gain market share.
4. With the assistance of an aftermarket
confederate, OEMs purchase all spares
(those in overhauled, repaired or repairable
condition) in the aftermarket, and then
withdraw them totally from the aftermarket.
If an operator requires a spare, it must
purchase a new part from the OEM.
Meanwhile, OEMs provide exclusive access
to the procured spares to their MRO
affiliates, thus eroding the competitiveness
of independent MROs and aftermarket
distributors.
Issues at contractual stage and offset
clauses while purchasing/leasing the
aircraft: Besides reluctance in information
sharing, airlines and engine OEMs provide
contractual conditionalities in exchange for
discounts on the price of the aircraft engines
and components.
26
These conditionalities
usually mandate airline operators to provide
after-market services or are characterized
by Power by the Hour (PBH) contracts at
their designated MRO shops. Most of the
shops are situated outside India, thus taking
a considerable share of the actual contract
spend to overseas destinations.
Further, the offset clauses in the defense and
the civil aviation sector that are decided at the
time of purchase of the aircraft often do not get
implemented and are therefore washed away
without any substantial outcome.
27
As a result,
training and technological capacity of the MRO
players in India remain restricted, thus limiting
their operations and expansion. 38 / MRO in India: Trends, Challenges and Way Forward
Countries such as China mandate the aircraft, engine and component
OEMs to establish their supply chain, manufacturing units and MRO
establishments within the country at the contractual stage, to ensure long
term strategic creation of a holistic eco-system for domestic sustainability.
28

28 https://www.trade.gov/market-intelligence/china-aircraft-maintenance-repair-and-overhaul-market#:~:text=China%20is%20
expected%20to%20become,10.5%25%20annual%20compound%20growth%20rate.
29 Based on stakeholder interaction
30 https://centreforaviation.com/analysis/reports/overcoming-the-skills-crisis-in-india-aviation-25633
31 Based on stakeholder interactions
Infrastructural issues: To cut down
logistics cost and streamline aircraft
operations, MRO services are usually
preferred within/near the airport premises.
To fulfil this requirement, countries such as
Singapore have provisions to reserve lands
for MRO hangars during the developmental
stages of airports. Major airports in India,
however, have little or no provisioning of
land for establishing MRO hangars within/
near the airport. This has left MRO operators
with limited choice to position themselves in
proximity to the airports, compelling them
to incur augmented logistics and operations
costs. MRO operators thus also face
stockholding issues which restrict their scope
to provide end-to-end services.
29
Another
infrastructural bottleneck of the Indian MRO
sector is the lack of training infrastructure. To
cite an example, at least 20-30 institutes do
not have an aircraft for training.
30
Lack of access to credit: MRO is a capital-
intensive sector and therefore requires large
capital expenditure for establishment and
expansion. The impact of the COVID-19
pandemic has significantly reduced the
business of airlines and MROs with marginal
reduction in costs. The resultant decline in
profitability has led to reduced availability of
funds for players in the aerospace industry.
As a result, access to credit has either been
very limited for MRO operators or have
been accompanied by exorbitant collateral
demands.
31

Issues in licensing and certification
framework: In order to cut down on cost
while leasing the aircraft, airline operators
often involve FAA or EASA approved MRO
centers. Also, MRO operators have to get
accreditation from FAA/EASA in order to
provide services to foreign airlines. This drives
away majority of the MRO business outside
India.

Additionally, even though DGCA guidelines,
with regards to MRO, are harmonized with
EASA regulations and guidelines under the
EU-India Aviation Agreement, yet European
authorities or countries following EASA,
often do not recognize DGCA certifications
and approvals at par with certifications
or approvals issued by the EASA states.
EASA certification permits Indian MROs
to maintain and release aircraft registered
in the European Union as well as install
components on them. An Indian MRO
is unable to perform services to aircrafts
registered in the European Union if its EASA
approval is absent or revoked. MROs must
obtain EASA clearance for European Union
registered aircrafts, even if they have DGCA
and FAA approvals.
In the last few decades, the following key
harmonization were undertaken between
DGCA and EASA requirements –
a. In January 2005, Civil Aviation
Requirements order (CAR 145) introduced MRO in India: Trends, Challenges and Way Forward / 39
to harmonize Indian requirements
for granting the approval of Aircraft
Maintenance organizations in line with
international standards of EASA.
b. In November 2011, Civil Aviation
Requirements order (CAR 66) in line with
EASA regulations related to issuance of
an Aircraft Maintenance Engineer’s (AME)
licence, conditions of its validity and
privilege to certify aircraft were issued.
c. In December 2017, Civil Aviation
Requirements CAR 147 (Basic) in line
with EASA regulations relating to grant of
approval to Aircraft Maintenance Training
Organization imparting ab-initio training
introduced
d. In August 2021, Working Arrangement
agreed between European Aviation
32 Based on stakeholder interactions
Safety Agency (EASA) and DGCA,
to achieve common safety and
environmental protection standards,
promoting understanding of each other’s
regulatory systems for aviation safety and
environmental protection and facilitating
exchange of aeronautical products,
services and personnel.
In spite of an almost synchronized regulatory
system in place by DGCA, any certificate
issued by DGCA is not considered by EASA,
while on the contrary, EASA has full market
access in India as DGCA accepts EASA
certifications and approvals. Because of the
prevalent stringent practices with respect to
EASA clearance, European aircraft lessors and
owners are skeptical of Indian MRO standards.
Thus, despite of FAA and DGCA approvals
in place, the European Lessors’ aircrafts are
maintained in Europe, which affects the Indian
market.
As a precedent, EASA and the Civil Aviation Authority of Singapore entered
into a working arrangement to recognize each other’s certifications in July
2017 to reduce regulatory duplications. This development must be looked
in the context that Singapore is one of the largest MRO hub in Asia, and
caters to bulk of MRO requirement from India’s Airlines operating in EU
airspace.
Demand-Supply mismatch as a result
of the COVID: 19 pandemic – As a result
of the pandemic, there has been excess
supply of MRO services, which has acted
as a deterrent to the development of the
Indian MRO sector, which was expected to
see significant growth after the tax reforms
of 2021. This mismatch has further been
compounded due supply chain bottlenecks.
Further, development of an MRO ecosystem
is capital intensive and requires long lead
time. All these factors combined together
have significantly impacted the business
operations of MRO players in India.
32
Duty, Tax and Royalty Issues
-Goods and Service Tax – The effective
GST levied for MRO services have been
brought down from an erstwhile rate of
18% to 5% in 2021 with an intent to push
the MRO sector at par with the global MRO
hubs. However, as per stakeholders, for
acquisition of spares, the effective GST still
often ranges from 15% to 28%. Further, an
order released in April 2020 for HSN Code
Chapter 84 says that some engine parts 40 / MRO in India: Trends, Challenges and Way Forward
are charged 18-28 percent GST.
33
The
price of spares and components occupies
a considerably larger share as compared
to other cost components such as labour.
Thus, minimal GST benefits on spares
and components has been a concern for
MRO operators. No airline will be willing
to pay 20% higher tax as compared to
destinations such as Dubai and Singapore,
which offer zero tax structures and tax
holidays for 10 years respectively, to
encourage aircraft maintenance activities.
34

-Custom interpretation of tax
notifications – Ambiguities over
classification of raw materials – such as
paints, aircraft parts, components, etc. –
often lead to augmented duties/taxes. Raw
materials such as specialty steel, nickel
based alloys, aerospace grade aluminium,
etc. are taxed as non-aircraft parts,
thereby affecting the competitiveness of
civil manufacture as well as MRO services.
Often customs officials face ambiguity over
the nomenclature of aircraft components
and start identifying the same with
33 Ibid.
34 Ibid.
35 Ibid.
other generic HSN codes having similar
nomenclature or the “others” category
under a certain HS code, and impose duty
as per the prescribed slab (percentage).
Components such as paint, microwaves,
LCD screens, etc., that are specifically built
for aircraft installation, are not interpreted
as such by the customs department, and
therefore, considerable duties are charged
while importing.
35
Further, due to the
prevalent inverted duty structure, there is
no incentive to manufacture components
locally. Import of finished components is
cheaper, owing to duty exemptions on
finished goods.
-Royalty charged by airports – As per
stakeholders, the Airport Authority of India
(AAI) continues to levy airport royalty on
the Gross Turn Over (GTO) – under several
categories such as ground handling,
revenue sharing, demurrage, and so on
– which ranges from 11% to 20%. Such
charges, paid for utilizing airport services,
negatively impact competitiveness of MRO
service providers. MRO in India: Trends, Challenges and Way Forward / 41
7.

Recommendations 42 / MRO in India: Trends, Challenges and Way Forward
Short–Term Measures
Focusing on areas with lesser IP control as entry points through joint ventures with
OEMs/globally significant MROs and bilateral negotiations
Establishing/assigning a nodal agency to identify
and streamline the roles and responsibilities of all
the stakeholders involved through inter-ministerial/
departmental coordination, identification of technology
priority areas, promoting home-grown technology and
self-sufficiency, expanding global outreach, human
capital development, etc.
Negotiating with
Internationally established
MROs/Manufacturers for
collaborations through joint
ventures and greater flexibility
in information sharing
Co-recognising
DGCA regulations
through bilateral talks
and treaties
Developing a capital investment
incentive policy through PLIs
for components and spares, tax
waivers, priority sector lending etc.
Resolving
issues related to
customs duty, tax,
royalty, etc.
Resolving custom
and tax issues such
as royalty tax, GST
issues etc.
Relaxation in land -lease
rentals; inclusion of
relevant reform measures in
the MRO Policy
Inclusion of MRO in the
Harmonised Master List
of Infrastructure
Sub-sectors
7. Recommendations
Table 4 – Recommendations: Short-Term and Long-Term Measures
Recommendations for Private Players
Recommendations for Government Stakeholders MRO in India: Trends, Challenges and Way Forward / 43
Developing infrastructure and fostering
collaborations with OEMs/manufacturers
to gradually achieve self-sufficiency in
manufacturing of spares and components
Capturing the higher end of the
component supply chain having
greater IP control through bilateral
negotiations and improved capacity
Long–Term Measures
Identification and subsequent
incentivization to manufacture the
components and spares where India can
have a comparative advantage
Developing a public-private
partnership model for civil and
defence public sector MROs
Civil-defence MRO convergence for
capacity enhancement and collaborative
efforts to bolster the industry
Human capital development through
combined and sincere efforts of industry,
academia and the government
Recommendations for Private Players
Recommendations for Government Stakeholders 44 / MRO in India: Trends, Challenges and Way Forward
In order to bolster the MRO sector in India
and place Indian MROs at par with the global
MRO players, the challenges and bottlenecks
elaborated in the preceding section need
to be addressed. Further, in order to attract
investments into Indian MRO services, the
sector has to display strong economics. For
this, defining steps need to be taken in terms
of attracting volumes, cost-saving, better
quality and ease of doing business. Apart
from a significant fleet size, servicing a larger
geographical market is also imperative to attain
envisaged growth in areas such as engine
and aircraft maintenance.
36
The following
recommendations have been formulated after
gathering feedback on important areas from
key stakeholders in the MRO industry:
Establishing/assigning a nodal agency:
In order to streamline and coordinate the
interests of all the stakeholders involved,
establishing a regulatory body/nodal agency
is recommended. A regulatory body that
looks into matters pertaining to management,
administration, interpretation of regulation and
implementation of MRO policies on ground
should be established. This regulatory agency
should ensure that relevant reforms are
implemented in the sector – such as ensuring
that provisions of the offset clause are strictly
mandated – through effective interventions on
the ground. The roles and responsibilities of the
regulatory authority can be broadly delineated
into –
1. Inter-ministerial/departmental
coordination – The nodal agency
can ensure effective coordination and
communication between the present
aviation bodies and line ministries such
as Ministry of Civil Aviation (MoCA),
Directorate General of Civil Aviation
(DGCA), Airport Authority of India (AAI) and
others to ensure holistic development of
the MRO industry in India as envisioned.
2. Identification and development of
technology priority areas – The nodal
36 Based on stakeholder interactions
agency shall identify key technological
intervention areas in the MRO sector such
as drones, predictive analytics, artificial
intelligence, etc. to impart competitive
edge and bring the Indian MRO industry
at par with the global standards and best
practices.
3. Nurturing and absorbing home-grown
technology through R&D – The nodal
agency shall explore opportunities of
self-sufficiency through promoting and
incentivising research and development
in the MRO industry, reflecting its
commitment to the government’s vision of
‘Aatmanirbhar Bharat’.
4. Offset management – Offset deals can
provide necessary push to the Indian MRO
industry in terms of technology acquisition,
capacity development and infrastructure
development if properly implemented. The
nodal agency can develop guidelines and
regulations to ensure that the offset clauses
are implemented in letter and spirit.
5. Expanding global outreach of the
Indian MRO market – The agency
should highlight and market the scope and
prospects of the Indian MRO industry in
order to attract foreign investments and
provide required impetus to the industry.
6. Fostering strategic partnerships – The
nodal agency can help foster strategic
partnerships between leading OEMs
and Indian MROs to facilitate access to
newer technology, components, spares,
designs, manuals, etc. Such collaborations
will aid the development of a broader of
MRO operations in the country. The nodal
agency may also explore opportunities of
collaborations within the country i.e. PPP
initiatives, civil-defence convergence, etc.
7. Ensuring acceptability of DGCA
regulations – One of the most important
areas of intervention for the nodal agency MRO in India: Trends, Challenges and Way Forward / 45
would be to conduct regular negotiations
with relevant stakeholders on DGCA
regulations. It needs to ensure greater
acceptability of DGCA regulations which
are, to a considerable extent, harmonised
with regulations such as EASA.
8. Human capital development – Persistent
efforts are required by the agency in order
to bring the industry and the academia
together to develop an efficient and
cost-effective human resource pool in the
country. The agency may also facilitate
exchange programmes with other countries
to ensure that the Indian labour force gets
necessary exposure and facilities.
The Malaysia Industry-Government Group for High Technology
(MIGHT) was established in mid-1990s as an industry-driven non-profit
organisation tasked with bringing industry stakeholders, government
and academia together along with the Malaysian Aerospace Council
established in 2001. MIGHT is chaired by the Prime Minister and
includes representatives from six relevant ministries. It serves as a
national level steering body that systematically charts policy priorities and
implementation strategies to upgrade the MRO industry in Malaysia.
Focusing on areas with lesser IP control
as entry points- As a starting point, Indian
MROs may explore opportunities in categories
with low IP control. There is considerable
scope in activities such as line maintenance,
structural repair, electrical and electronics,
avionics, hangar maintenance, etc. which
can potentially be outsourced to India.
India can focus on gradually capturing the
aforementioned space through negotiations
with Tier-I MROs in the short term. With the
development of substantial capacity and
foothold in these areas, it can gradually move
up the value chain by venturing into areas such
as engine maintenance, landing gears, etc.,
which have greater IP control.
Global players need to be approached for
potential collaborations with Indian MROs,
wherein such players can benefit from the
potential scale of operations in India and
Indian MROs can gradually ensure capacity
enhancements in the MRO space.
Developing infrastructure and fostering
collaborations with OEMs/manufacturers
to gradually achieve self-sufficiency in
manufacturing of spares and components
– Beyond a conducive regulatory and
policy ecosystem, MRO industry requires
physical space and a robust infrastructure in
place to function efficiently. Developments
in infrastructure would include regular
maintenance of facilities, production and
transport equipment, etc., along with efficient
inventory management of spares, components
and tools such as personal protective
equipment, hand equipment, etc.
Moreover, with the disruption of supply chains
in the post-pandemic world, development of
a self-sufficient MRO industry becomes even
more important. Cost of spares form 55% of
overall outlay for component MRO and 80%
for engine MRO. Therefore, India needs to
gradually increase foothold in the component/
spare manufacturing space, to ensure lesser
dependence, cost reductions and enhanced
competitiveness.
The expanding manufacturing sector in India
and conducive government policies can
provide an ideal environment for the production
of spares and components within the country.
The government may initiate tie-ups/joint
ventures of Indian MROs with leading OEMs 46 / MRO in India: Trends, Challenges and Way Forward
and manufacturers. It may also consider
extending the benefits of various schemes such
Production Linked Incentives (PLI) to provide
necessary fillip to domestic manufacturing
of components/spares. As per stakeholder
feedback, it is feasible for FAA/EASA certified
MROs to augment local production in the near
future, which may therefore be considered
for PLI. In the longer term, DGCA certified
parts/components may be promoted through
necessary negotiations.
In the MRO sector, imports are consistently increasing, leading to cost
pressure and affected margins. For instance, as per stakeholders, engine
spend for civil aviation is estimated to be around INR 6,000-7,000 crores,
which poses considerable challenges. Therefore, local capacities need to
be tapped in the long run.
As reported by certain MROs, capabilities have been developed over
the years to conduct maintenance services – which were outsourced
abroad in the past – in India. To carry out such services, only piece parts
are imported and the maintenance work is conducted in India, thereby
increasing overall profitability. This leads to such MROs moving up the
value chain, which needs to be encouraged.
These measures will not only boost the MRO
industry in the long term but will also create the
necessary ripple effects through job creation
and the growth of regional economies. Finally,
necessary planning, capacity building and
negotiations with OEMs/airlines with respect to
future aircraft models would go a long way in
ensuring sustainable growth in the Indian MRO
sector.
Singapore has the maximum number of JVs in MROs. This makes
it evident that labour costs has limited influence in the engine and
component MRO, labour cost in Singapore being comparatively on the
higher side. Around 90% of the value is driven by maintenance of parts
as well as logistics and supply chain availability. Additionally, distance also
doesn’t influence the selection of MROs. For instance, aircrafts are taken
to countries such as the UK for MRO services.
Deliberating and overcoming OEM
monopoly – Global players such as
manufacturers and OEMs, especially
component manufacturers are reluctant to
share relevant information pertaining to aircraft
design, manuals, spares, components, training
data, etc. that poses a major hurdle for the
MRO players to operate. This has created
serious bottlenecks for the MRO industry,
especially the component industry to grow
within India. Moreover, in order to attain a
discounted price while purchasing/leasing
aircrafts, airline operators are required to
conduct their aftermarket MRO services at MRO in India: Trends, Challenges and Way Forward / 47
locations designated by OEMs/manufacturers.
The Government can encourage OEMs and
airline operators to help establish complete
nose-to-tail MRO support infrastructure as
well as manufacturing capacities for parts and
spares within the country, either as standalone
entities or through joint ventures with key
industry players.
Given the outsized advantages that OEMs
possess with design, data and manuals, MROs
can consider partnering with the OEMs rather
37 https://www.aviationbusinessnews.com/mro/mros-and-oems-a-changing-dynamic/
38 https://www.naveo.com/insights/aerospace-mro-part-choices-new-usm-der-or-pma/
than competing with them. Through such
strategic partnerships MROs can gain access
to newer technology, components, spares,
etc. and leverage respective expertise to jointly
deliver a wider and deeper range of services
to their customers. For OEMs, joint ventures
would ensure greater flexibility both in terms
of packages they can offer to customers as
well as network flexibility without investing in
their own capacities, thus ensuring a win-win
situation for all.
To create a range of MRO capabilities, Singapore-based SIA Engineering
Company (SIAEC) has established a total of 23 subsidiaries and joint
ventures in seven countries with OEMs and strategic partners such as
Rolls-Royce, Pratt & Whitney, GE, Safran, Collins and Jamco.
37
Besides, MROs and operators have also
developed potential alternatives
38
to new OEM
parts such as-
1. Surplus Parts – This category can include
Used Serviceable Materials (USM), new
materials (excess inventory) and used
unserviceable materials
2. Designated Engineering
Representatives (DER) Repairs – FAA
approved engineers who can approve
technical data for repairs and modifications
outside the Computerized Maintenance
Management System (CMM)
3. Design Organization Approval (DOA)
– Necessary approvals for an MRO to
develop internal repairs
4. Parts Manufacture Approval (PMA):
Licensed as well as Competitive
– FAA approval granted to non-OEM
manufacturers of aircraft parts
The above-mentioned options can be viable
alternatives to manoeuvre through the
strict monopoly regime of the OEMs and
manufacturers.
Acceptance of DGCA Regulations at
par with Global Standards – The DGCA
regulations at present are considerably
harmonised with EASA regulations. Despite
the harmonisation, OEMs and manufacturers
do not accept DGCA regulations and mandate
FAA/EASA certification for heavy maintenance,
lease return checks, etc. These multiple
approvals and certifications result in loss of
business opportunities for the Indian MRO
players. It is desirable that the Government
of India engage in bilateral talks with the EU,
the USA, Canada, UK, Australia and other
countries to harmonize and standardize DGCA
certifications/approvals to be accepted at par
with EASA/FAA/Transport Canada/UK CAA/
Australian CASA standards. This will assist
in getting global recognition for Indian MRO
players. 48 / MRO in India: Trends, Challenges and Way Forward
There is an ardent need for bilateral reciprocity to achieve envisaged
export potential in the MRO sector. As per stakeholders, reported
cases of crashes, faults, etc. are minimal in the Indian aviation sector
and therefore there is no viable reason for non-acceptance of DGCA
standards globally. Hence, complete reciprocity may be sought by the
policy establishment in terms DGCA approvals in the same way as EASA/
FAA approvals are accepted in India to boost MRO exports.
The reform measures should incorporate
renegotiations on the EU-India Aviation
Agreement and Bilateral Aviation Safety
Agreement with the European Union and the
United States respectively to acknowledge
cross-validation and certification in aerospace
manufacturing and modifications or repairs
done on aircraft and aircraft components.
Developing a capital investment incentive
policy – India has a captive and growing
domestic aviation market, unlike other MRO
hubs such as Singapore, Malaysia, Sri Lanka,
etc. which are export oriented and rely on the
Indian fleet size to operate their businesses.
However, as a consequence of inadequate
MRO infrastructure and regulatory bottlenecks,
the domestic aviation sector is compelled to
switch to international markets.

To attract foreign OEMs/manufacturers and
MROs, a capital investment incentive policy,
encompassing component MRO, landing
gears, engines and APU, with combined
contributions from the centre and the states
is desirable. The incentives should be tied
to technology and capital expenditures. The
incentives should be directly correlated with the
degree of technology investments and capital
expenditures. (Tax credits should be calculated
using a percentage of capital expenditure
investments spread over 5-8 years.)

Other incentives might include Production
Linked Incentives (PLIs) for the manufacture
of components and spares, Remission of
Duties and Taxes on export products (RoDTEP)
scheme on Indian manufactured parts and
components, state level incentives and
discount on electricity and other amenities,
priority sector lending and improved soft
infrastructure such as use of artificial
intelligence and analytics, single window
clearances, etc. to provide necessary push to
the Indian MRO industry.
Public-Private Partnership Model –
Establishing a MRO facility is highly capital
intensive, involving a longer break-even
period. This has been one of the major
reasons for MRO players and OEMs to avoid
establishing newer MROs in India. Moreover,
the infrastructure and capacity utilisation of
key public sector MRO players such as AIESL
and HAL have not been optimal. At times,
due to lack of spares or infrastructure, aircrafts
remain unserviceable beyond desired time
periods. This is where the government can
reap the benefits of a PPP model, such as the
private sector’s efficiency, access to cutting-
edge technical know-how as well as private
funding. The necessity for a conventional
repair system or one based on PPP would
be determined to a large extent by the
equipment’s deployment region, operational
criticality and technological content. As a result,
the viability of implementing PPP would have to
be determined depending on the deployment
of equipment in a particular sector; and hence,
a “one-size-fits-all” solution is unlikely to
succeed. It may be necessary to construct it
uniquely and differently for each sector, taking MRO in India: Trends, Challenges and Way Forward / 49
into account the equipment profile of that sub-
sector.
Out of the numerous investment models,
it is suggested that the government can
incorporate the ‘Government Owned, Privately
Operated’ model to collaborate with key private
players and OEMs in the industry.
Malaysia has efficiently leveraged the Public-Private Partnership model by
attracting OEMs as strategic partners in developing its MRO industry.

Civil-defence MRO convergence – The
capacity of defence MRO players such as HAL
is yet to be utilised completely. Moreover, civil
aviation MRO in India is still at a nascent stage
and encountering challenges as discussed in
the preceding section. The training capacities,
spares and components required in civil and
defence sectors are similar. To induce holistic
growth in the MRO industry, defence MRO
and related infrastructure is crucial and cannot
be ignored. It is therefore recommended to
have a Civil-Defence MRO convergence for
effective and efficient utilization of available
infrastructure and capacity in both the sectors.
Further, in terms of manpower, erstwhile
defence personnel may be absorbed into the
civil MRO industry to meet human resource
requirements in the long run as well as ensure
high quality output. The certification process of
such personnel may also be relaxed owing to
the considerable experience they possess in
handling complex defence aircrafts. 50 / MRO in India: Trends, Challenges and Way Forward
Civil-defence convergence will aid the
stakeholders to jointly develop a plan on what
civil and defence players could do together
to enhance their capacities and identify the
additional capabilities that can add value to this
convergence.
Resolving issues related to customs
duty, tax, royalty, etc. – To attract operators
to conduct MRO services in India, the
effective GST and customs duty – to the
tune of 5-28% – levied on the purchase of
components and spares needs to be brought
down considerably, in line with countries
such as Malaysia and Singapore.
39
Further,
Notification No. 55/2021-Customs dated 29th
December 2021 has entailed duty exemptions
for aircrafts only, and has excluded aircraft
parts. Therefore, aircraft parts continue
to attract full duty as per their respective
chapters – thereby making their procurement
by MROs expensive – whereas airlines remain
exempt from the same. There is a need for
relevant revisions to address this issue. Also,
to maintain coherence in the interpretation
of aircraft parts during custom checks and
clearances, Illustrated Parts Catalogue (IPC)
or any other appropriate document such
as Aircraft Maintenance Manual (AMM),
39 Based on stakeholder discussions
40 AAI Annual Report, 2021
Component Maintenance Manual (CMM),
provided by aircraft/engine/component OEMs
should be taken as substantive evidence by
the customs department to enlist the parts and
spares as aircraft parts and subsequently, all
imports intended for use on aircrafts – across
various chapters – may be brought under a
uniform GST of 5%. Alternately, the inclusion
of all aviation parts, spares, materials, etc. into
Chapter 8803 (Schedule I, IGST Notification
No. 1/2017) – which outlines 5% GST on
aviation parts – may be deliberated upon to
ensure uniformity. Finally, abolition of customs
duty on parts used in maintenance work of
re-delivery aircrafts may also be encouraged
to stem foreign exchange outflows and boost
employment opportunities.
The Airport Authority of India may exercise
relaxations with respect to the royalty levied
on MROs, to make the business environment
more competitive and viable.
Another recommendation to attract the foreign
investments in the MRO sector is the removal
of dividend distribution tax and capital gain
tax on foreign OEMs and MROs, which shall
possibly attract large scale collaborations and
investments.
Like Japan and Singapore, there can be registered importers in
India in order to minimise the confusion and suspicion pertaining to
misinterpretation of custom laws. There will be one more layer of
checking and payments, but the associated expenses will still be less
than the tax paid.
Relaxation in land rentals – The Airports
Authority of India (AAI), a statutory body under
the Ministry of Civil Aviation, is responsible for
creating, upgrading, maintaining and managing
civil aviation infrastructure in India. It presently
manages 136 airports out of which there are
24 international airports, 81 domestic airports,
21 Civil Enclaves at Defence Airfields and
10 Custom Airports.
40
The land lease rentals
charged by Airport Authority of India (AAI) to
MRO players is exorbitantly high and further
adds on to the operating expense of MROs. MRO in India: Trends, Challenges and Way Forward / 51
However, it has been identified that land lease
rentals do not occupy a major share in the
net revenue of the Airport Authority of India
(AAI).
41
Rent and services formed 7.8% of the
overall revenue of AAI in the FY 2019-20, which
increased to 17.8% in FY 2020-21 primarily as
a result of decreased total revenue.
42

The central government can provide discounts
on land lease rentals (below the minimum
threshold discount on ready reckoner/circle
land rates) in order to incentivize the MRO
players. It is desirable that such reform
measures form a part of the MRO Policy of the
Ministry of Civil Aviation.
Human capital development – The aviation
sector is a strategic and sensitive industry
that requires attention to detail and there is
no scope of human error. It therefore requires
highly skilled manpower that is trained in the
41 Based on stakeholder discussions
42 AAI Annual Report, 2021
technical nuances of the aircraft models. To
produce such skilled labour, a rigorous theory
and practical curriculum is required. The
existing training institutes should sincerely
work towards upgrading their capabilities
and imparting the right knowledge to the
available human resources. The Government
of India should invite MRO players/OEMs/
manufacturers and aviation universities to
collaborate, coordinate and develop an
efficient education and training curriculum to
impart necessary training to the engineers and
support staff engaged in the MRO industry. To
incentivize aviation maintenance, repair and
overhaul as a viable career option for the Indian
labour force, the Government of India can
partly finance scholarships and other benefits
such as student-exchange programmes, which
will aid desirable human capital development
for the MRO industry.
MIGHT’s industry connections in Malaysia aided the development
of education and training programmes that aligned with industry
improvement strategies. A consortium of 11 Malaysian public institutions
was formed in 2002 to address the human resource needs of the
aerospace and other high-tech industries. This nationwide programme
laid the groundwork for more focused, targeted relationships with
businesses to fill talent gaps in niche areas.
Inclusion of MRO in the Harmonised
Master List of Infrastructure Sub-sectors
– MRO services can be included in the Master
List of Infrastructure Sub-sectors under the
‘Transport’ category, given the immense
potential it holds in terms of contributing to
the economy of the country – buoyed by
increased demand in the near future – as well
as to the development of its workforce. This
development may go a long way in providing
necessary relief to the MRO sector in terms
of reduced costs (through tax exemptions on
components, spares, etc. among others) and
augmented investments (including foreign
capital, low interest rate loans, investments
from the private sector, etc.). 52 / MRO in India: Trends, Challenges and Way Forward
Table 5
Key Stakeholder Perspective
to Bolster the MRO Industry
in India
Airline manufacturer/OEM’s opinion to bolster the MRO
industry in India
Factors such as reduced turnaround time, better quality of services
offered and ease of doing business are more important as compared to
cost-efficient labour in the case of component and engine MRO. India
needs to develop its business case accordingly.
Getting into joint venture with international MROs having IP rights, joint
ventures and expertise can be an entry point for the Indian MROs to
crack into the already established global supply chain. With this, there
needs to be a reduction in GST along with other bottlenecks.
Offering tax holidays/ waivers and other incentives that will also have
tertiary advantages such as increased Foreign Direct Investments and
employment generation.
The importers of aircraft parts/components could be registered with
customs in order to have duty exemptions for the products imported
under MRO. It would reduce the confusion and suspicion pertaining to
misinterpretation of custom notifications.
MRO also needs an ecosystem including warehousing, preservation
works, trained manpower, etc.
The development of an MRO ecosystem not only requires conducive
government policies but also requires manufacturing of new airplanes.
Moreover, the supply chain of aircraft manufacturing, from its
announcement to delivery takes 5 to 7 years which is a long-term
process.
The MRO provider can enter the market directly with OEMs when the
supply chain is planned and designed for a new airplane, which isn’t
manufactured without the introduction of a new engine. A new engine
has not been announced since 2013-14.
Introduction of MRO into the supply chain system starts at planning
stage. The launch of the aircraft may happen in a few years’ time after
that. It is important to keep engaging with the manufacturers/OEMs.
If a nodal agency is set up by the Government of India, it would have a
significant impact only if it is empowered and has the authority to take
decisions like in Singapore (Civil Aviation Authority of Singapore) and
Hong Kong (Hong Kong Civil Aviation Department).
For roller crafts, more than volume the focus should be on manufacturing
complete helicopters in India. DGCA may consider getting into bilateral
agreements in order to certify the helicopters manufactured in India
Helicopters which are currently manufactured in India do not have
international footprint as they do not have the international acceptability
and selling power. There can be a partnership opportunity here also.
Local MRO player’s opinion to bolster the MRO
industry in India
Developing a resilient supply chain infrastructure for
the manufacture of airline components and spares.
Capturing the lower end of the component value
chain having lesser IP control through joint ventures
with OEMs/globally significant MROs and bilateral
negotiations and gradually shifting to higher end of the
supply chain.
Relaxation in GST and land lease rentals, removing the
issue of custom interpretation through standardization
of Integrated parts Catalogue (IPC), manuals, etc.
Establishing/assigning a nodal agency to identify
and streamline the roles and responsibilities of all
the stakeholders involved through inter-ministerial/
departmental coordination, identification of technology
priority areas, promoting home-grown technology and
self-sufficiency, expanding global outreach, human
capital development, etc.
Developing a capital investment incentive policy
through tax waivers and holidays, PLI on aircraft parts
and spares, etc.
Negotiating with OEMs and manufacturers for joint
ventures and greater flexibility in information sharing.
Universalization of DGCA standards at par with FAA/
EASA regulations.
Human capital development through combined efforts
of industry, government and the academia.
Leveraging advanced technologies such as drones,
artificial intelligence and data analytics to further
enhance the capacity of Indian MRO players
Synergy between civil and defence MRO for effective
and efficient utilization of available infrastructure
and build a strong business case to attract foreign
investments. MRO in India: Trends, Challenges and Way Forward / 53
Local MRO player’s opinion to bolster the MRO
industry in India
Developing a resilient supply chain infrastructure for
the manufacture of airline components and spares.
Capturing the lower end of the component value
chain having lesser IP control through joint ventures
with OEMs/globally significant MROs and bilateral
negotiations and gradually shifting to higher end of the
supply chain.
Relaxation in GST and land lease rentals, removing the
issue of custom interpretation through standardization
of Integrated parts Catalogue (IPC), manuals, etc.
Establishing/assigning a nodal agency to identify
and streamline the roles and responsibilities of all
the stakeholders involved through inter-ministerial/
departmental coordination, identification of technology
priority areas, promoting home-grown technology and
self-sufficiency, expanding global outreach, human
capital development, etc.
Developing a capital investment incentive policy
through tax waivers and holidays, PLI on aircraft parts
and spares, etc.
Negotiating with OEMs and manufacturers for joint
ventures and greater flexibility in information sharing.
Universalization of DGCA standards at par with FAA/
EASA regulations.
Human capital development through combined efforts
of industry, government and the academia.
Leveraging advanced technologies such as drones,
artificial intelligence and data analytics to further
enhance the capacity of Indian MRO players
Synergy between civil and defence MRO for effective
and efficient utilization of available infrastructure
and build a strong business case to attract foreign
investments.
8.

Conclusion 54 / MRO in India: Trends, Challenges and Way Forward
8. Conclusion
The prevailing trends in the aviation industry
makes it evident that India is emerging as the
fastest growing market in the post-COVID
world. This will be further augmented through
conducive government policies catalysing
infrastructure development such as the
National Civil Aviation Policy (2016), Regional
Connectivity scheme (RCS), etc. To achieve the
same, there needs to be an ecosystem – as
envisaged by the policy establishment – that
promotes ease of doing business in India and
facilitate investments in the MRO industry.
Structurally, there is potential for advancements
by way of systemic improvements,
diversification of services, digitisation and
human resource development among others.
To access required capital for capacity
enhancement, the Indian MRO service
providers could consider joint ventures with
aircraft OEMs and international airlines. This
can be done on sub-contract basis as well.
Such collaborations will aid in enhancing
capacity and align their standards in line with
the global best practices adhered to by the big
players. MRO service providers in India would
have to gradually move up the value chain, by
progressively foraying into high-value services
such as ‘C’ and ‘D’ checks as well as engines
MRO services, in order to compete with foreign
vendors. India’s diverse and efficient pool of
human resources, which includes engineers,
data analysts, AI & ML experts, etc., can
provide the necessary labour arbitrage that
can be effectively utilised to optimize the
present MRO capacity of the country. Usage
of real-time big data and analytics tools can
aid leveraging of the huge volume of data
that is generated to facilitate overall growth.
Infrastructure upgradation and creation of
state-of-the-art training institutes – which
provide access to cutting edge technologies
and meet global standards – for the existing/
potential workforce is also recommended.
Further, steps can be taken to iron out various
challenges Information access and technology
transfers from the OEMs can be negotiated at
the contractual stage itself. Standardisation/
acceptability of DGCA regulations can be
ensured through negotiations with OEMs/
manufacturers and bilateral talks between the
respective governments. Short-term measures
can also include addressing anomalies with
respect to Goods and Service Tax (GST) on
spares/parts/components, standardising the
interpretation of tax notifications by customs
officials through the usage of Illustrated
Parts Catalogue (IPC) or any other relevant
document, etc. among others. Royalties
payable by MROs to airport authorities – on
Gross Turnover (GTO) – may also be brought
down in line with government policies to ensure
greater competitiveness.
In addition, there is scope for facilitation
of credit accessibility and introduction of
incentives for investments in the Indian MRO
sector. The Government of India can consider
providing necessary tax rebates, waivers and
other incentives through a Capital Investment
Incentive Policy to attract foreign investments,
which can include Production Linked Incentive
(PLI) Scheme for investments in capacity
enhancement of the MRO industry, Remission
of Duties and Taxes on Export products
(RoDTEP) for aircraft components and spares
manufactured in India, concession in land
lease rentals, etc. Countries like Singapore and
Malaysia have introduced similar waivers and
concessions in order to attract investments
in the aerospace sector. Further, for public
enterprises (both civil and defence) such
as AIESL and HAL, there is a scope for
public-private partnerships and civil-defence
convergence for efficient and effective utilization
of infrastructure and resources.
To ensure streamlined development in the
sector, it is recommended to establish a nodal
agency to facilitate overall development by
streamlining the roles and responsibilities of
all stakeholders involved. Such an agency
would go a long way in fostering holistic growth through inter-ministerial/departmental
coordination, identification of technology
priority areas, promotion of home-grown
technology and self-sufficiency, expansion of
global outreach, human capital development,
etc.
Owing to consistent augmentation in air traffic,
strategic location and lower labour costs, the
Indian MRO sector presents considerable
growth potential. The government has initiated
various reforms in the aviation ecosystem – by
addressing tax policies and other regulatory
aspects to promote ease of doing business
and improving the commercial outlook of the
MRO sector – to enhance overall scalability and
profitability of key services. Through structured
improvements and concerted efforts by major
stakeholders, it is expected that the MRO
sector will play a strategic role in boosting
the aviation sector, and therefore promoting
economic growth in the long-term in addition
to establishing India as a key aerospace
destination in the world. 56 / MRO in India: Trends, Challenges and Way Forward
Annexure I

List of
Stakeholders MRO in India: Trends, Challenges and Way Forward / 57
Annexure I - List of Stakeholders
Stakeholder Organization
Mr. Anoop Kumar Dy. GM (Engg.) and Executive Assistant to CEO,
Air India Engineering Services Ltd.
Mr. Anubhav Kumar Head of Strategy, Boeing India
Ms. Ashmita Sethi President and Country Head, Pratt and Whitney
Mr. Ashok Gopinath CEO, GMR Aero Technic
Mr. Bharat Malkani CMD, Max Aerospace and Aviation; President MRO Association of India
Mr. Dinesh Kumar Deputy Director, Ministry of Civil Aviation
Mr. Jose Mathew CEO, Air India Engineering Services Ltd.
Ms. Mini M. Rojy Dy. General Manager, Air India Engineering Services Ltd.
Mr. Om Prakash Sharma Deputy Secretary, Ministry of Civil Aviation
Mr. Parag Sehgal Director (India), Lockheed Martin
Mr. Piyush Shrivastava Senior Economic Advisor, Ministry of Civil Aviation
Mr. Rajeev Gupta CEO, Indamer Aviation
Mr. Rajeev Kumar Rastogi Head of Marketing, Air India Engineering Services Ltd.
Mr. Salil Gupte President, Boeing India
Mr. Sandeep Bahl US India Aviation Cooperation Program
Mr. Sanjay Sharma Sr. Assistant General Manager (Jet Engine Overhaul),
Air India Engineering Services Ltd.
Mr. Sharad Agarwal Executive Director, Air India Engineering Services Ltd.
Mr. Subhabrata Roy CEO, Taj Air Limited
Mr. Sunil Kumar Sr. Assistant General Manager (Engg.), Air India Engineering Services Ltd. 58 / MRO in India: Trends, Challenges and Way Forward MRO in India: Trends, Challenges and Way Forward / 59 Bureau of Research on Industry and Economic Fundamentals Pvt. Ltd.
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