India Strives To Become Global Aviation Hub, 5% IGST Introduced On MRO Items. The government has implemented a uniform IGST rate of 5% on all aircraft and aircraft engine parts, a significant step towards making India a global aviation hub. The 5% IGST rate will reduce operational costs, resolve tax credit issues, and attract investment.
Union Civil Aviation Minister Rammohan Naidu said the introduction of the IGST rate on Maintenance, Repair and Overhaul (MRO) industry items is a major boost for the aviation sector.
Earlier, GST rates of 5%, 12%, 18%, and 28% on aircraft components created challenges. This included an inverted duty structure and GST accumulation in MRO accounts. Now, the new policy has eradicated these disparities and simplified the tax structure, bringing-growth to the MRO sector.
India Strives To Become Global Aviation Hub
Naidu lauded Prime Minister Narendra Modi’s Atmanirbhar Bharat initiative, saying his support for transforming India into a leading aviation hub has been crucial in driving the policy forward. The government has projected India’s MRO industry to become a $4 billion industry by 2030.
Former Civil Aviation Minister Jyotiraditya Scindia had said in September 2023 that the number of airports in India will increase up to 220, the number of planes will more than double to 1,500, and the number of passengers nearly triple, touching 42.5 crore. He highlighted that Indian carriers have been very concentrated on growing capacity in the domestic market.
Scindia said for too long India had its hub either on the eastern border or the western border. The government is working towards enhancing India’s capability for multiple hubs, with one in Delhi, one in the South and the other in the western side.
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Moreover, Ameya Joshi, the founder of the aviation research platform Network Thoughts, said domestic carriers have a better chance of succeeding compared to western carriers by providing courteous service, Indian food and service.
He noted that there has been significant growth in travel for visiting family and friends by senior citizens who prefer service with knowledge of the local language and transit at Indian airports.
