Infrastructure status for MRO

 In a move that could help the nascent industry of Maintenance, Repair and Overhaul (MRO) related to the larger aviation industry, the government has decided to provide it infrastructure status, which will allow the industry players to go in for external borrowings.

At present, the MRO industry in India accounts for $800 million out of a $50 billion international market. Analysts said that given the right environment, the MRO industry in India has the potential to achieve annual growth rate of 10 per cent for the next 10 years.

A government statement said the change in policy would give a fillip to the MRO industry. It said the industry would now be considered as part of the sub-sector of airports in the transport sector infrastructure for the purpose of External Commercial Borrowings (ECBs) in accordance with a policy change announced by RBI.

The RBI had in a circular issued on January 6 said, “On a review, it has been decided that, for the purpose of ECB, 'Maintenance, Repairs and Overhaul' (MRO) will also be treated as a part of airport infrastructure.”

Accordingly, MRO, as distinct from services other than infrastructure, will be considered part of the sub-sector of airports under the transport sector of infrastructure.The Civil Aviation Ministry feels that the MRO industry will grow at a faster rate with expanding fleet size of incumbent carriers and with the entry of more players into the Indian aviation market. 

It said industry representatives feel that policy change at this juncture to classify MRO as transport infrastructure is quite timely.

Rationalising the RBI action, the ministry said that the MRO industry is potentially capital intensive, involving substantial import of equipment and related technical expertise 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 tenures and cheaper debt 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," it said. 

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