During her budget speech on Tuesday, Finance Minister Nirmala Sitharaman introduced a series of incentives aimed at enhancing Maintenance, Repair, and Overhaul (MRO) activities in the aviation and shipping sectors. As one of the world’s fastest-growing domestic aviation markets, India is positioning itself to capture a larger share of MRO operations, which have traditionally been performed abroad.
To support this goal, Sitharaman proposed significant extensions to the timelines for the export and re-import of goods related to repairs. Specifically, the period for exporting goods imported for repairs will be extended from six months to one year. Additionally, the time-limit for re-importing goods under warranty will be increased from three years to five years. These changes are expected to simplify and encourage the MRO processes within India, making the country a more attractive hub for these activities.
The government is keenly aware that a significant portion of MRO work is currently conducted outside India, and these new measures aim to reverse that trend. In conjunction with these proposals, the government has also taken steps to make the tax environment more favorable. Earlier this month, a uniform Integrated Goods and Services Tax (IGST) rate of 5% was implemented on all aircraft and aircraft engine parts. Previously, IGST rates for these items ranged from 5% to 28%, creating a more consistent and predictable tax structure that is likely to further stimulate the domestic MRO industry.
These initiatives reflect the government’s broader strategy to enhance India’s position in the global aviation and shipping sectors. By fostering a more supportive environment for MRO activities, the country aims to attract more investment, create jobs, and boost overall industry growth, aligning with its ambition to become a leading player in the global MRO market.
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