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Aviation MRO industry holds immense potential for India

India Infoline News Service / Mumbai Sep 22, 2006 17:10 
 
V Thulasidas, CMD, Air India says that that the exponential projected growth in the aviation sector will provide an impetus to the Maintenance, Repair & Overhaul activity in India
 

India's current growth phase in Civil Aviation provides India a unique opportunity to develop its nascent Aviation MRO industry. In a statement, V Thulasidas, the Confederation of Indian Industry (CII) National Committee Chairman for Civil Aviation & CMD Air India mentioned that the exponential projected growth in the aviation sector will provide an impetus to the MRO (Maintenance, Repair and Overhaul) activity in India. According to a CII estimate, the size of the MRO business in India over the next 5 years is expected to be on average, US$400mn per annum.

India is projected to add an additional 450 aircraft to its existing national fleet size of 215 domestic aircraft in the next 5 years, as per DGCA estimates.

The aviation sector provides an opportunity for building the avionics and aviation equipment capabilities of Indian industry; and for skilled Indian personnel to make a mark in the aviation sector globally, stated Thulasidas.

Elaborating on the market need for a strong MRO industry in India, Thulasidas stated that all Airlines need line-maintenance and major maintenance for their aircraft; along with engine maintenance; and maintenance for airframe components, accessories & repairs. Currently, only Indian Airlines and Air India have in-house maintenance facilities, but both the national carriers too have to outsource maintenance facilities abroad, at times.

According to CII the state of the MRO industry in India indicates a virtual absence of credible third-party MRO facilities in India. While captive MRO operations of existing airlines provide the basic infrastructure and expertise for development of the MRO industry, there is also a need for third-party maintenance & overhaul to support the requirements of the domestic airlines. To emerge as an MRO hub for the region, there were regulatory and infrastructural limitations that need to be addressed, CII stated.

Strong aviation growth; competition between the existing and recently launched airlines; open-skies policy pursued by the government; focus on airport privatization; and a clear movement forward on the regulatory environment are some of the factors which have made India an integral component of investment plans of global aerospace majors, according to CII. The combination of a growing civil and defence aviation market, and the vast pool of engineering and software manpower, will help India emerge strongly on the global aerospace industry map.

Boeing has signed an agreement to set up a maintenance, repair and overhaul facility with an investment of US$100mn. The company will invest a further US$85mn to install aircraft simulators and provide training support. EADS, the European aerospace and defence group, has announced plans to invest $2.57bn over the next 15 years in India in production as well as research and development facilities. The Indian MRO market has also attracted foreign as well as domestic aviation companies to announce specific plans for MRO investments.

According to specific CII recommendations to provide impetus to the MRO industry, the Confederation has called for encouraging Third-Party MROs in the country. Welcoming announcements by the Delhi International Airport Limited (DIAL) to set up an independent MRO centre as part of the upgraded airport, CII has recommended that all greenfield projects and modernization projects of existing airports should ensure hangar space for maintenance. Domestic & international operators also needed to be permitted to outsource line maintenance.

There was also a need to ensure uniformity in tax structure and tax incidence on varying trade practices. CII also called for a few initiatives like allocation of land for hangars, reasonable/realistic lease rentals, long-term lease periods, and revoking levies on aviation activities by the Airport operators.