India Budget 2024: Nirmala Sitharaman Unveils Major Incentives for Aviation and Shipping MRO Activities

Finance Minister Nirmala Sitharaman announced incentives to boost maintenance, repair, and overhaul (MRO) activities in the aviation and shipping sectors during her budget speech on Tuesday. India is one of the fastest-growing domestic aviation markets in the world.

Domestic Aviation

“To promote domestic aviation and boat & ship MRO, I propose to extend the period for the export of goods imported for repairs from six months to one year. In the same vein, I propose to extend the time limit for re-import of goods for repairs under warranty from three to five years,” Sitharaman said.

The government is working on boosting the Maintenance, Repair, and Overhaul (MRO) activities in the aviation sector as most of the work is currently done outside the country.

Integrated Goods and Services Tax (IGST)

The government had implemented the 5 percent uniform Integrated Goods and Services Tax (IGST) rate on all aircraft and aircraft engine parts earlier this month. Prior to this change, IGST rates on all aircraft and engine parts ranged from 5 percent to 28 percent.

MRO Services

Sitharaman highlighted that these steps are aimed at making India a global hub for MRO services. The extension of time limits for the export and re-import of goods for repairs is expected to reduce the burden on companies and encourage more MRO activities within the country. This move is part of a larger strategy to enhance the competitiveness of the Indian aviation and shipping sectors and reduce dependence on foreign MRO services.

Benefits of Investment

By providing these incentives, the government aims to attract more investments in the MRO sector, create job opportunities, and improve the overall efficiency of the aviation and shipping industries in India. This initiative is also expected to lead to cost savings for airlines and shipping companies, as they will be able to get their maintenance and repair work done domestically rather than sending their aircraft and ships abroad.

In conclusion, the announced incentives and tax reforms are significant steps towards strengthening India’s MRO capabilities in the aviation and shipping sectors, making the country a more attractive destination for such activities. The extension of time limits for export and re-import of goods for repairs will provide greater flexibility to companies and promote the growth of the MRO industry in India.