Govt plans special purpose vehicle for aircraft manufacturing

The government plans to set up a special purpose vehicle to advance aircraft manufacturing in India, Union Civil Aviation Minister K Rammohan Naidu said on Wednesday. Speaking at a conference in the national capital, Naidu said efforts are underway to start aircraft manufacturing activities in the country within the next five years.

India is one of the world's fastest growing civil aviation markets. The minister was speaking at a conference organised by industry body PHD Chamber of Commerce and Industry.

Separately, the Civil Aviation Minister had earlier announced a uniform IGST rate of 5 per cent on all aircraft and aircraft engine parts, effective from July 15. This decision is expected to make India’s Maintenance, Repair and Overhaul (MRO) industry a global aviation hub by reducing operational costs, resolving tax credit issues and attracting investment. 

The introduction of a uniform 5 per cent IGST rate on MRO items is a major boost for the aviation sector. Previously, varying GST rates on aircraft components created challenges, including an inverted duty structure and GST accumulation in MRO accounts. 

This new policy eliminates these disparities, simplifies the tax structure, and fosters growth in the MRO sector, he had said. Highlighting future prospects, the minister said that the Indian MRO industry is projected to become a $4 billion industry by 2030. This policy change is a crucial step towards building a strong ecosystem for MRO services, driving innovation, and ensuring sustainable growth.