NCAP will bring Achhe Din for the Indian MRO industry

The first vibe of acche din was felt when 36% royalty on gross turnover imposed by airports on MROs was brought down to 15% Sairaj Aiyyer | The Dollar Business

The Rs.5000 crore Indian MRO market, has expertise, bandwidth to handle all kinds of MRO activities such as full aircraft maintenance, repairs, overhaul, and also components servicing

In a conversation with The Dollar Business, Pulak Sen hints that the “to-be-announced” National Civil Aviation Policy would delight MROs. As a Founder - Secretary General of the MRO association of India, Pulak Sen is an ex-aviation journalist and a representative of the Indian MRO industry. Dressed in a green suit, and a white hat, Sen has the charisma of a Johnny Depp from the Pirates of the Carribean, however delegates at the Aviation expo shower him with respect, which only Marlon Brando from The Godfather could command. It can be inferred from Sen’s thoughts that it is Acche Din ahead for Indian MRO sector (Maintenance, Repair & Overhaul). The MRO association of India, felt the first vibe of Achhe din, when 36% royalty on gross turnover imposed by airports on MROs was brought down to 15%. Sen, who has been representing the MRO industry on various government panels was hopeful of bidding adieu to the issue of 5/20 policy, but believes that the to-be-announced NCAP (National Civil Aviation Policy), will be a smooth one. OPPORTUNITY LOSSES

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Pulak Sen speaking to The Dollar Business at the India Aviation Show 2016, Begumpet Hyderabad

The Rs.5000 crore Indian MRO market, has the expertise and bandwidth to handle all kinds of MRO activities such as full aircraft maintenance, repairs, overhaul, and also components servicing. The Indian MRO industry not only has 3^rd party MRO players such as GMR and Airworks, but also players such as Air India, which has in-house MROs situated across 6 cities- Delhi, Bombay, Nagpur, Hyderabad, Trivandrum, and Kolkata. In spite of a good network, leased aircrafts are sent out of India for MRO which accounts as a potential opportunity loss for Indian MROs. Sen reasons: “Airlines enter into an AMC package when an aircraft is leased. Also cases involving maintenance of components, means the opportunity for an MRO is lost. However, we (Association) are trying to restrain such opportunities from going out.” He points out that the Indian players have expertise in dealing with GoAir and SpiceJet, which depend completely on Indian MROs. Even, Jet works with GMR and Airworks are from India. LOW HANGING FRUITS Sen points out that aspects such as components, radio, navigation and communication system repairs are low hanging fruits for entrepreneurs. Another great activity is for civil MROs to work with military and armed-forces. While one can argue that Defence MRO was largely held captive with the Army, Navy & Air Force, to be served by HAL (Hindustan Aeronautics Limited), Sen shares: “Slowly, the armed forces are outsourcing non-core activities civil MROs. A CEMILAC and a DGCA certification are essential to qualify. Since there is not much difference over the two, our association is pressing for a common certification. A joint certification, would enable civil MROs to work with the armed forces too.” Sen additionally shares that the Indian defense forces are looking to indigenize their products. “The Indian Air Force and Navy currently have Russian equipment, which they are finding difficult to get serviced, after the disintegration of the USSR. To this regards, the forces are willing to hand hold Indian entrepreneurs, make them self-sufficient, and also help them reduce the costs of maintenance,” he adds. POSITIVES FROM POLICIES Sen is optimistic about new policies, but is satisfied with the 2015-16 budget. The sector got prominence in a 2012-13 financial budget which briefly spoke about MROs. A year later, a budget offered customs exemption on spare parts and aircraft tyres. That budget however came with a rider that MROs could hold goods only for a period of 6 months. To this regards, the current budget has abolished the rider, and MROs can stock items for an infinite period. Things have changed from 2011 in a positive manner to enable India as the MRO Hub. A 2015 National Civil Aviation Draft Policy states that foreign aircraft along with passengers will be allowed for a period of 60 days, post which an extension can be applied with the DGCA. Sen highlights that the biggest impediment for MROs is the 15% service tax. “Singapore charges 7% GST, while countries such as Sri-Lanka, USA, Malaysia and Middle-East have no such taxes. We are requesting the government to either abolish or give an abetment for 5 years on service tax to the Indian MRO industry like it did for the Indian IT industry. This will definitely help the industry boom. The moment we stabilize we can again pay the service tax,” he concludes.

March 25, 2016 | 11:45am IST

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The Dollar Business Bureau - Mar 25, 2016 06:13 IST

NCAP will bring Achhe Din for the Indian MRO industry

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