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India Aims to Become a Global Hub for Aircraft Maintenance and Repair, Says Government

India Aims to Become a Global Hub for Aircraft Maintenance and Repair
The Indian government has announced its strategic intent to establish the country as a global centre for aircraft Maintenance, Repair, and Overhaul (MRO). This ambition is supported by a comprehensive suite of policy reforms, tax incentives, and infrastructure development initiatives aimed at bolstering the domestic MRO sector and reducing foreign exchange outflows associated with overseas maintenance services.
Policy and Regulatory Reforms to Boost the MRO Sector
In a written statement to the Lok Sabha, Civil Aviation Minister Kinjarapu Rammohan Naidu outlined the government’s efforts to foster a competitive environment for MRO operations. Central to these efforts are the new MRO Guidelines introduced in September 2021, which eliminated royalties and enhanced transparency and certainty in land allotments for MRO facilities at Airports Authority of India (AAI) airports. These guidelines also permit MRO operators to extend land lease agreements by an additional 15 years beyond the initial tenure, providing greater stability for long-term investments.
Taxation reforms have played a pivotal role in improving the sector’s competitiveness. The Integrated Goods and Services Tax (IGST) on imports of aircraft components and engine parts has been reduced to 5%, while the GST on MRO services has been lowered from 18% to 5%, with full Input Tax Credit (ITC) available. Furthermore, subcontracted transactions by foreign Original Equipment Manufacturers (OEMs) and MRO companies to Indian firms are now classified as exports, attracting zero-rated GST. These measures collectively aim to reduce the cost burden on domestic MRO providers and encourage greater participation from global players.
Additional incentives were introduced in the Union Budget 2024-25, including an extension of the export period for goods imported for repairs from six months to one year, and an increase in the re-import time limit for goods sent abroad for warranty repairs from three to five years. The Addendum to the MRO Guidelines 2026, issued in February 2026, further supports infrastructure development by offering a moratorium and rent-free period for operators constructing new hangars at AAI airports. The Union Budget 2026-27 also extended Nil Basic Customs Duty (BCD) on aircraft components, including engines, used in manufacturing and MRO, with exemptions on parts, testing equipment, and toolkits extended until March 31, 2028.
Private Sector Engagement and Competitive Challenges
Highlighting private sector involvement, Minister Naidu cited the example of Safran, which has established Safran Aircraft Engine Services India (SAESI) in Hyderabad with an initial investment of ₹1,300 crore. This facility is among the world’s largest aircraft engine MRO centres, underscoring the growing confidence of global aerospace companies in India’s MRO potential.
Despite these positive developments, India faces significant competition from established global players such as MTU, which maintains a broad portfolio of manufacturer authorizations and a strong presence in the CFM aftermarket. Industry experts suggest that India’s regulatory and operational frameworks will need to meet stringent international standards to gain wider acceptance. Competitors like AAR Corp. are also expanding their global reach, capitalizing on supply chain efficiencies and benefiting from the resurgence in commercial aviation and increased defense spending.
The government remains optimistic that its reforms will enhance India’s aircraft maintenance capabilities, nurture a globally competitive MRO ecosystem, and position the country as a preferred destination for aircraft maintenance, repair, and overhaul services on the international stage.

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