(MENAFN- KNN India)
New Delhi, Jul 16 (KNN) In a significant move to bolster India's Aviation sector, the government has introduced a uniform 5 per cent Integrated Goods and Services Tax (IGST) on aircraft parts.
This policy change, effective from July 15, 2024, aims to strengthen the domestic Maintenance, Repair, and Overhaul (MRO) industry and position India as a global aviation hub.
Union Civil Aviation Minister Kinjrapu Rammohan Naidu announced the implementation, stating, "The introduction of a uniform 5 per cent IGST rate on MRO items is a major boost for the aviation sector."
He explained that the previous varying GST rates of 5 per cent, 12 per cent, 18 per cent, and 28 per cent on aircraft components had created challenges, including an inverted duty structure and GST accumulation in MRO accounts.
The minister highlighted that this new policy eliminates these disparities, simplifies the tax structure, and fosters growth in the MRO sector. Naidu also acknowledged Prime Minister Modi's support for the Atma Nirbhar Bharat initiative and his vision of transforming India into a leading aviation hub.
The policy adjustment, recommended by the GST Council in its 53rd meeting on June 22, 2024, is expected to reduce operational costs, resolve tax credit issues, and attract investment. "Our vision is to transform India into a leading aviation hub. The Indian MRO industry is projected to become a USD 4 billion industry by 2030," Naidu added.
Industry experts believe this move will significantly enhance the competitiveness of the Indian MRO sector, fostering innovation and efficiency. India's geographical advantage, with 65 per cent of the world's population within 5-6 hours of flying time, positions it well to become a global aviation connecting hub.
The policy change comes at a time when India's aviation market is poised for substantial growth. IndiGo CEO Pieter Elbers pointed out that India is currently underserved in terms of aviation, with only about 750 aircraft for a population of 1.4 billion, compared to China's 3,500 aircraft for a similar population.
Recent large-scale aircraft orders by Indian carriers, including IndiGo's order for 500 Airbus A320 aircraft and Air India's order for 470 aircraft, further underscore the sector's growth potential. Aviation consultant CAPA projects that India's airline fleet could double by 2030, with carriers potentially adding up to 700 aircraft in the next 5-7 years.
This uniform IGST rate is expected to play a crucial role in supporting this growth trajectory, making India more competitive in the global aviation landscape and moving closer to realising its ambition of becoming a major international aviation hub.
(KNN Bureau)
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