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Change in Policy Gives Fillip to MRO Industry

Maintenance, Repair and Overhaul (MRO) industry will now be considered as part of the sub-sector of airport in the transport sector infrastructure for the purpose of External Commercial Borrowings (ECBs) in accordance with a policy change announced by RBI Circular No. 85 dated January 6, 2014. Consequently, the MRO industry which is a nascent vertical with an annual turnover of about $800 million in the aviation sector, will get a boost.

Global MRO market is estimated to be about $50 billion and market analysis suggests that given the right environment, MRO industry in India has the potential to achieve an annual growth rate of 10% for the next 10 years. Expanding fleet size of incumbent carriers and with the entry of more players in the Indian aviation market, MRO industry is set to grow at a faster rate than before. Policy change at this juncture to classify MRO as transport infrastructure is quite timely, feel the industry representatives.

MRO industry is potentially capital intensive, involving substantial import of equipment and related technical knowhow and services. Since MRO has a long gestation period, access to foreign debt is vitally important and critical.

MRO industry will now be able to avail ECBs for long tenure and cheaper debts from international markets. Access to cheaper sources of credit in a high interest rate environment in domestic market will improve viability of the industry and pave the way for robust growth of this high-tech industry in India.

Tags: Aircraft maintenanceAviationBusinessIndiaMaintenance repair and operationsMROTransportation and LogisticsUnited State

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