India to be developed as MRO hub of Asia

By | March 3, 2016

Civil Aviation Minister says Budget 2016-17 has paved the way for developing India the MRO hub of Asia.

The Minister of Civil Aviation Shri P Ashok Gajapathi Raju has said that the Budget 2016-17 has paved the way for developing India as a Maintenance, Repair and Overhauling (MRO) hub of Asia. Speaking to media persons  in New Delhi today, he said that the budget has made provisions for incentivising domestic value addition to help Make in India. Under this, the following provisions have been made for the MRO business in India :

  1. a) The tools and tool-kits used by the MRO have been exempted from Customs and Excise duty.
  2. b) The exemption shall be given on the basis of documents certified by the Directorate General of Civil Aviation.
  3. c) Procedure for availment of exemption from customs and excise duty being simplified based on records and subject to actual user condition.
  4. d) Restriction of one year for utilisation of duty free parts being removed.
  5. e) The notification on Standard Exchange Scheme has been revised to allow import of unserviceable parts by MROs for providing exchange / advance exchange.
  6. f) Foreign aircraft brought to India for MRO work will be allowed to stay up to 6 months or as extended by the DGCA. The aircraft can carry passengers in the flights at the beginning and end of the stay period in India.

The MRO business of Indian carriers is  around Rs 5000 crore, 90% of which is currently spent outside India – in Sri Lanka, Singapore, Malaysia, UAE etc. Given our technology and skill base, the government is keen to develop India as an MRO hub in Asia, attracting business from foreign airlines while retaining the domestic business. The above budget provisions will go a long way in realizing this aim, he said.

Shri Gajapathi Raju also welcomed the budget provisions aimed at reviving the unserved and under-served airports in the country for increasing regional connectivity. The Budget 2016 provides that the Central Government will partner with the State Governments to develop some of these airports and airstrips in the country The Minister shared with the media persons the following Action Plan for revival of such airports :

  1. a) Identification of airstrips controlled by State Governments: 

(i)      Airports/Airstrips under control of State Governments will be identified for development in consultation with State Governments and airlines to make such airports operational.

(ii)    Commitment from the State Governments on tax exemptions, reimbursement of expenditure of the recurring operational cost by providing free electricity, water and security to the airport.  The entire airport project to have tax exemption from all municipal/property tax and VAT on ATF are to be brought down.  State Government to share the costs for identified airports/airstrips proposed to be developed.

  1. b) Revival of AAI owned non-operational airports:

In the financial year 2015-16, AAI proposes to revive 10 non-             operational airports.  These airports are initially unviable and would  require budgetary support from the Government.

Talking about the budget announcement to  implement Indian Customs Single Window Project. at major ports and airports starting from beginning of next financial year Shri Raju said that this will reduce the dwell time of export and import air cargo by bringing all regulatory agencies responsible for giving clearances to a common platform. It will also enable the integration of processes of import cargo stakeholders so as to enable easy adoption of EDI. Further, he said that the opportunity for deferred payment of customs duties as provided by the Budget will facilitate importers and exporters with proven track record for faster processing of cargo. Hence, this will reduce the dwell time of their cargo.

About  the likely impact of budget on skill development, the Minister said that
Service Tax exemption under Deen Dayal Upadhyay Grameen Kaushalya Yojana will enable, firstly, training providers to set up training institutes across the country. Secondly, it will attract youth for cargo and ground handling from rural areas of the country. Exemptions for assessing bodies empanelled centrally by Directorate General of Training will also promote setting up of training institutes and attracting youth towards civil aviation sectors. About the increase of Excise Duty on Air Turbine Fuel from 8 % to 14 % the Minister said that the decrease in ATF base price over the last 13 months is around 25.04%. The increase in ATF prices due to increase in excise duty from 8% to 14% comes to around 6.56%

The Minister of State for Civil Aviation and Culture & Tourism (I/C) Dr Mahesh Sharma welcomed the provisions made for the Civil Aviation sector in the Budget 2016 and said it would give a major boost to the aviation sector in the country and make flying easy for the common man.

Secretary Civil Aviation Shri Rajiv Nayan Choubey and other senior officials of the Ministry were also present on the occasion.

Source Ministry of Civil Aviation 02-March, 2016

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