India has introduced major tax cuts and policy changes to become a global center for aircraft Maintenance, Repair, and Overhaul (MRO) services. By lowering GST to 5% and extending customs duty exemptions, the government aims to reduce reliance on foreign repair hubs. This shift is attracting significant private investment, notably from global players like Safran in Hyderabad.
Detailed Coverage
The Indian government is aggressively pushing to turn the country into a global destination for aircraft Maintenance, Repair, and Overhaul (MRO) services. Currently, a large portion of maintenance work for the growing Indian airline fleet is performed abroad, resulting in significant foreign exchange spending. Through a series of regulatory and fiscal reforms, the government aims to capture this value domestically by building a competitive MRO ecosystem.
Tax Reforms and Duty Exemptions
A central part of this strategy involves reducing the cost of operations for MRO service providers. The Integrated Goods and Services Tax (IGST) on imported aircraft parts and engines has been reduced to 5%. Additionally, the government lowered the GST on MRO services themselves to 5% and allowed for full Input Tax Credit (ITC). This is a major change from the previous 18% tax bracket, effectively making domestic repair shops more price-competitive against international peers in regions like Dubai or Singapore.
Further support comes through the extension of customs duty exemptions. The Basic Customs Duty (BCD) on critical repair tools, testing equipment, and aircraft components has been waived until March 31, 2028. For domestic firms, subcontracting work from foreign entities is now categorized as an export, which qualifies for zero-rated GST, incentivizing foreign airlines to outsource their maintenance requirements to India.
Land Policy and Infrastructure Support
The Ministry of Civil Aviation has also revised land and operational guidelines to address infrastructure bottlenecks. At airports managed by the Airports Authority of India (AAI), land allocation processes have been simplified. Operators can now secure longer-term stability with lease agreements that allow for a 15-year extension. Furthermore, the 2026 addendum to MRO guidelines introduces rent-free periods and moratoriums for companies constructing new hangars, reducing the initial burden of high capital spending required for such facilities.
Private Investment and Sector Impact
The policy environment is already drawing global aerospace giants. Safran Aircraft Engine Services India (SAESI) has opened a major facility in Hyderabad, backed by an investment of ₹1,300 crore. As one of the largest aircraft engine MRO centers globally, the facility signals growing confidence in India’s technical talent and cost structure.
While these policy changes provide a framework for growth, the sector’s success will depend on how quickly domestic players can scale up to meet international safety and quality standards. The ability of Indian MRO providers to manage complex supply chains and reduce turnaround times for airlines—a critical metric in the aviation industry—will be the key monitorable for long-term growth. Investors and industry participants will be tracking the capacity utilization of new hangars and the pace at which major global airlines transition their repair contracts to Indian facilities over the next few years.