Budget gives wings to Nagpur MRO

The aircraft MRO (maintenance, repair and overhaul) unit near Nagpur has got a major boost with the Union Budget exempting the tool and tool-kits required for the facility from custom and excise duties. Restrictions on usage of duty free parts within a year of its import have also been done away with.

Further, foreign aircraft brought to India for MRO work will be allowed to stay up to six months or as extended by the aviation regulator Directorate General of Civil Aviation. The aircraft can carry passengers at the beginning and end of the stay period in India.

MRO is a Rs 5,000 crore market in Asia, out of which about 90% business goes to countries including Sri Lanka, Singapore, Malaysia and UAE. India loses millions of dollars in foreign exchange to other countries, which have better tax laws and cheaper costs. Maintenance accounts for around 10% of an airline's cost.

According to aviation consultant CAPA, in the past most maintenance work was conducted in-house, but in 1990 airlines, led by low-cost carriers, started outsourcing the work to focus on their core business of commercial flying.

Boeing had helped in setting up over Rs 600 crore facility as part of its MoU with Air India in bargain of the national carrier purchasing over 100 aircraft under a 2006 deal. However, the MRO project at special economic zone of multi-modal international cargo hub and airport (Mihan) near Nagpur got delayed for several reasons including that of land acquisition. It was handed over to Air India last year for operations.

As per the officials, the facility has two 100x100 metre hangars for wide-body aircraft and another 24,000 square metre area for other related work. Each hangar can house four wide-bodied aircraft and six narrow-bodied aircraft at a time.

The large providers offer the three main MRO capabilities: Airframe, engine and component services. Engine maintenance makes up the largest proportion of the global market (35%), followed by component (22%) and airframe heavy maintenance (13%).