India Cuts Costs, Opens Leases to Boost Aircraft Maintenance Industry

The Indian government has rolled out sweeping reforms aimed at transforming its Maintenance, Repair and Overhaul (MRO) sector into a world-class hub for aircraft servicing, seeking to reverse decades of dependence on foreign maintenance facilities. The policy, unveiled on September 9, 2021, introduces incentives designed to attract investment and reduce costs for operators.

Under the new framework, land allotments at eight airports, including Begumpet, Bhopal, Chennai, Delhi, Juhu, Kolkata, Chandigarh, and Tirupati, will be leased through open tenders, rather than allocated by request; leases will be tenured for 30 years instead of just 3-5 years.

The Airports Authority of India (AAI) will no longer charge royalties for MRO facilities, and escalation of lease rentals will be capped at 15 percent every three years, replacing the current system of annual increases between 7.5 % and 10 %.

Earlier policy steps include reducing the Goods & Services Tax (GST) on MRO services to 5 percent, and identifying land and regulatory reforms to encourage greater civil-military convergence in servicing aircraft and helicopters. Civil Aviation Minister Kinjarapu Rammohan Naidu described the goal as making India “a global MRO hub.”

The reforms are welcomed by industry players, who say the changes should lower barriers to entry, improve predictability, and reduce costs. Key challenges remain, however, including ensuring consistent regulatory oversight, securing skilled labor, and for existing facility operators to compete under the open-bidding model.