In a written reply in the Lok Sabha, Civil Aviation Minister Kinjarapu Rammohan Naidu said, “The Government has taken various measures to create a conducive environment for the development of aircraft Maintenance, Repair and Overhaul (MRO) sector in the country and to reduce the foreign exchange outflow.”
The minister said the government introduced new MRO Guidelines on September 1, 2021, abolishing royalties and bringing transparency and certainty in land allotments for MRO facilities at Airports Authority of India (AAI) airports.
He added that the revised guidelines also allow the extension of land lease agreements for MRO operators by an additional 15 years after completion of the initial 15-year lease period.
On the taxation front, Naidu said the Integrated Goods and Services Tax (IGST) on imports of aircraft components and aircraft engine parts has been reduced to 5 per cent to enhance the competitiveness of the domestic aerospace industry.
He further informed that the GST on MRO services has been reduced from 18 per cent to 5 per cent with full Input Tax Credit (ITC). Transactions subcontracted by foreign Original Equipment Manufacturers (OEMs) and MRO companies to domestic MRO firms are also treated as exports with zero-rated GST.
The minister said that under the Union Budget 2024-25, the period for export of goods imported for repairs was extended from six months to one year, while the time limit for re-import of goods sent abroad for repairs under warranty was increased from three years to five years.He also highlighted the Addendum to the MRO Guidelines 2026, issued on February 20, 2026, which provides a moratorium period and rent-free period for MRO operators constructing new hangars at AAI airports, thereby incentivising investment in capital-intensive hangar infrastructure.
According to the minister, the Union Budget 2026-27 also provided Nil Basic Customs Duty (BCD) on aircraft components, including engines, used for aircraft manufacturing and the manufacture of aircraft parts. The exemption from Basic Customs Duty on parts, testing equipment, tools and tool-kits used for aircraft MRO has also been extended till March 31, 2028.
Highlighting private sector participation, Naidu informed Parliament that Safran has established Safran Aircraft Engine Services India (SAESI) in Hyderabad with an initial investment of Rs 1,300 crore, describing it as one of the world’s largest aircraft engine MRO facilities.
The government said the measures are aimed at strengthening India’s aircraft maintenance capabilities, creating a globally competitive MRO ecosystem and positioning the country as a preferred international destination for aircraft Maintenance, Repair and Overhaul services.