An inter-ministerial task force on MRO needs to be formed immediately by the government to check the outflow of MRO revenue, foreign exchange and jobs. It is critical that both the taxation and policy related bottlenecks are thoroughly examined and addressed to put the Indian MRO industry on a high growth trajectory. One main issue that needs to be tackled on an urgent basis are the unnecessary taxes on the industry which drive down the domestic MRO industry's competitiveness and reduce investors' interest in it.

Rationalise tax structure

MRO is critical to the growth of the aviation sector in India. It generates employment, revenue and government taxes. A close collaboration between the government, airlines, airports and the MRO industry would be crucial for addressing the high taxation in the form of VAT and Service Tax along with other policy level issues.

Some actions are urgently required to make India a global MRO hub. This starts with the elimination of discriminatory taxation policy for domestic MRO players. Due to discriminatory tax policy, Indian MRO players have to suffer an additional tax burden of nearly 40 percent over foreign MROs. These are in terms of import duties, VAT and service tax. This has led to a strange situation. India carriers prefer to fly their aircrafts and crew at a high cost to other MRO locations like Dubai, Singapore, Malaysia, Sri Lanka etc, since it still works out to be more cost-effective than doing the repairs in India. There is an urgent need for rationalisation of this anomalous taxation policy that has only weakened India's competitiveness as an aviation hub.

Secondly, it is important to abolish import duties for spare parts. Due to high import duties, (not applicable to foreign MROs) local MROs are not able to maintain an inventory of key spare parts. This, at times, leads to Indian aircrafts being grounded for longer periods. Abolition or reduction of import duties for spare parts will cut short the timelines for servicing the aircrafts.