DBT Bureau
Bhubaneswar, 3 August 2024
In a significant advancement for the domestic MRO industry and aviation sector, the Government has announced a uniform 5% IGST rate on the import of parts, components, testing equipment, tools, and toolkits for aircraft, regardless of their HSN classification, provided specified conditions are met. This policy change is a vital step in boosting the competitiveness of the Indian MRO sector, driving innovation and efficiency, and building a stronger and more efficient aviation industry.
The Government has taken several steps to facilitate the setting up of aircraft Maintenance, Repair and Overhaul (MRO) services in India through various policies, regulations and other incentives which include:
i. As part of the announcements made in Union Budget 2024-25, the period for export of goods imported for repairs has been extended from six months to one year. Also, the time limit for re-import of goods for repairs under warranty has been extended from three to five years.
ii. New MRO Guidelines announced on 1st September 2021 inter alia abolish royalties and build transparency and certainty in land allotments for MROs in AAI airports.
iii. GST on MRO has been reduced from 18% to 5% with full Input Tax Credit from 1st April 2020.
iv. Transactions sub-contracted by foreign original equipment manufacturers (OEMs)/ MRO to domestic MRO are treated as ‘exports’ with zero-rated GST from 1st April 2020
v. Exempted Customs Duty on tools and tool kits
vi. Simplified clearance processing of parts
vii. 100% Foreign Direct Investment permitted via automatic route for MRO
This information was given by the Minister of State in the Ministry of Civil Aviation, Murlidhar Mohol in a written reply to a question in Lok Sabha yesterday.
