India Can Become an MRO Hub

India could soon emerge the civil aviation maintenance, repair and operations (MRO) hub for Asia-Pacific. With the Indian market growing at around 8% annually, the civil aviation ministry is expected to actively pursue foreign investment in MROs, so large deals and joint ventures with global aviation majors may be expected soon. The entire Asia-Pacific aircraft and engine MRO market totalled $ 8.71 billion in 2005 and is estimated to touch $12.90 billion in 2011. Many foreign as well as Indian companies are looking to set up MROs in India.

In recent months, three different joint ventures between Indian companies and foreign companies like Airbus, Boeing and SIA Engineering have embarked upon setting up MROs. It is learnt that Global Vectra, the second largest helicopter operator in India, plans to set up an MRO facility in Mumbai. The government will consider the allocation of land for hangars, reasonable and realistic lease rentals, long-term lease periods, and revoking royalty on aviation activities to encourage the creation of MRO hubs in the country. It would also consider outsourcing line maintenance by domestic and international airlines to MROs. Greenfield and modernisation projects of existing airports will also have provision for hangars and space for MROs.

Airlines need line maintenance for their aircraft; heavy airframe and engine maintenance; also component repair and overhaul facilities. Currently, only Indian Airlines and Air India have in-house maintenance facilities but, at times, these Airlines too have to outsource maintenance to foreign companies. There is only one third-party aircraft MRO facility in India. The booming civil aviation sector is expected to get a massive 303% hike in allocations in the current Plan period. The sector will get a whopping Rs 52,108 crore against Rs 12,928 crore sanctioned in the 10th Plan period. Projections suggest a 19% increase in passenger traffic and 11% in cargo traffic in the 11th plan. The rise in funds for the sector will be to facilitate essential and substantial expansion of infrastructure for the improvement of airport capacity and passenger amenities. The growth in traffic passing through Indian airports is estimated at 18.8% a year, raising the present traffic of 733.38 lakh to 2054.00 lakh by 2011-12. In case of cargo, the growth estimated is 11.4% a year. Keeping in view these growth projections, substantial augmentation in airport capacities and MRO facilities is warranted during the 11th Plan period.