KUALA LUMPUR -- Addressing the tax incentive structure is a major challenge for India if it is too meet its goal of stimulating the MRO sector, according to an industry observer.
A strategy blueprint released recently, endorsed by the government, recommends ways India can expand the local aviation industry. The study noted that 90% of Indian airline MRO is outsourced to other countries, and it set an ambitious goal of reversing that ratio so that 90% is carried out in India.
However, the current tax system for the MRO industry is counterproductive to that target, says Sajumon S.P., Jet Airways’ assistant manager for line maintenance. India does not have similar tax incentives that other countries have for MRO industries, he said on the sidelines of the Aviation Week MRO Southeast Asia conference. This makes it harder for MRO startups, and makes it more likely that foreign companies will look elsewhere to start joint ventures.
It appears the government recognizes this problem. The strategy document states that a “significant course correction in policies, taxation and customs procedures” is needed for the MRO industry. However, one challenge could be that other industries may object if they do not receive the same tax relief, said Sajumon M.P.
Jet Airways carries out its own line maintenance, and also does its own C-checks unless it has no capacity. However, many of the country’s rapidly growing low-cost carriers send their heavy maintenance overseas.