By: Jaideep Mirchandani, Group Chairman of Sky One
In its January report, Crisil Ratings predicts that the revenue of India’s domestic aircraft maintenance, repair, and overhaul (MRO) industry will surpass Rs 4,500 crore in fiscal 2026, reflecting a 50 per cent growth over fiscal 2024. The rating agency’s projection is not surprising, especially given the rising operating fleet size of Indian carriers, which, according to the report, is expected to grow by 25 per cent by next year.
Furthermore, the reduction in Goods and Services Tax (GST) on aircraft components and services makes domestic MROs more competitive compared to their overseas counterparts and helps ease working capital pressure. Last year, the government announced that a uniform rate of 5% IGST would apply to imports of parts, components, testing equipment, tools, and toolkits for aircraft, irrespective of their HSN classification, subject to specified conditions.
I think such a policy change will improve the competitiveness of the Indian MRO sector and open up the scope for innovation and efficiency. The policy also exempted Customs Duty on tools and toolkits, simplified the clearance process for parts, and allowed 100% Foreign Direct Investment through the automatic route for MRO.
Usually, Indian MROs provide line checks, which are carried out before every take-off. Airframe checks occur every 12 to 18 months, during which aircraft are grounded for three to four weeks. Redelivery checks are also conducted at the end of lease contracts. As the Crisil report suggests, while line and airframe checks are closely linked to aircraft fleet size, redelivery checks will likely increase in the coming year. Meanwhile, reducing GST input tax may lower component-related expenditure and bring Indian MROs in line with their Asian peers. Their cost advantages are expected to help them capture a greater market share.
According to reports, only 14 per cent of the total MRO spent by Indian carriers last year was handled by domestic MROs, mainly because high-value maintenance checks and engine checks are contracted to overseas players. This also calls for more facilities to carry out engine checks, complete overhauls, and technical integration. There is also a need to develop a skilled workforce to carry out advanced engine maintenance, especially for newer aircraft, considering the vast number of orders placed by Indian carriers for the next 20 years.
In this scenario, investing in expanding hangars and related capabilities becomes essential. More partnerships with OEMS to enhance local production of spare parts can help reduce reliance on imports. The Government, the Civil Aviation Ministry, private manufacturing companies, and airlines can launch collaborative efforts to improve infrastructure. Investing in training programmes and collaborating with tech leaders for better research and development will also be crucial.
The future looks promising, with leading airlines in India planning to develop in-house MROs. Along with cities like Bengaluru, more states are now opening their doors to setting up MRO hubs. Recently, we came across the announcement by the Odisha Government that they are formulating an investor-friendly policy framework to establish the state as a preferred destination for MRO operators and OEMs. The state plans to collaborate with the Government of Singapore to adopt best practices in MRO operations.
Now, with carriers planning to develop new airports and expand their fleets, we are likely to witness more such state-level collaborations in the MRO segment.