Budget 2015-16: Aviation ministry bats for tax sops for MRO biz

The Civil Aviation Ministry has sought tax sops and easing of customs norms for the Indian MRO industry, saying that this would not only make domestic units economically viable but also give a fillip to Prime Minister Narendra Modi's 'Make in India' campaign.

"We want to encourage our own MRO business and so we are looking at some tax sops and easy customs regulations in the 2015-16 budget," official sources said.

The Indian Maintenance, Repair and Operations (MRO) market is around 30 per cent costlier on account of a 12 per cent service tax it charges from customers than those in places like Sri Lanka, Dubai, Hong Kong, Singapore and China.

Due to the present high-tax structure, the domestic carriers get their fleet overhauled in other countries due to lower costs there.

"On the one hand, this results in loss of foreign exchange and on the other a loss of business for the domestic units. If taxes such as service tax and VAT are taken care of by the government (abolished), the Indian MRO industry will also be able to attract business from other parts of the world, besides getting the local clients," the sources said.

According to an estimate, the MRO business currently stands at $800 million, which is expected to touch $2.5 billion mark by 2020.

A lower tax-structure will make the domestic industry competitive with the foreign players, they said, adding, "More business would mean more employment too. We expect the government to address all these issues in the budget."

Besides, strong local MRO industry will also help in taking Modi's ambitious Make In India campaign forward, they said.