India's MRO
Sector Receives Infrastructure Status
Maintenance, Repair and Overhaul (MRO) industry
will now be considered as part of the sub-sector of airport in the transport
sector infrastructure for the purpose of External Commercial Borrowings (ECBs)
in accordance with a policy change announced by RBI Circular No. 85 dated
January 6, 2014. Consequently, the MRO industry which is a nascent vertical
with an annual turnover of about $800 million in the aviation sector, will get a boost.
Global MRO market is estimated to be about $50
billion and market analysis suggests that given the right environment, MRO
industry in India has the potential to achieve an annual growth rate of 10% for
the next 10 years. Expanding fleet size of incumbent carriers and with the
entry of more players in the Indian aviation market, MRO industry is set to
grow at a faster rate than before. Policy change at this juncture to classify
MRO as transport infrastructure is quite timely, feel the industry
representatives.
MRO industry is potentially capital intensive,
involving substantial import of equipment and related technical knowhow and
services. Since MRO has a long gestation period, access to foreign debt is
vitally important and critical.
MRO industry will now be able to avail ECBs for
long tenure and cheaper debts from international markets. Access to cheaper
sources of credit in a high interest rate environment in domestic market will
improve viability of the industry and pave the way for robust growth of this
high-tech industry in India.
[Source: PIB (MCA) Press Release dated 13th
January 2014]