The government’s lofty ambitions of making India a maintenance, repair and overhaul (MRO) hub with civil aviation reforms, has not cut much ice with experts.
The Finance Ministry calls the MROs “a big business” but experts think the concept does not hold much promise as the airline industry is on the brink. Some analysts have dismissed progress on such Budget pronouncements as a move to divert attention from India’s jaw dropping statistics on 3,025 corona deaths and a caseload exceeding 95,639.
Noted strategic expert, Colonel Anil Bhat says all this sounds hunky dory but MRO hub creation involves a lot of infrastructure work. “It is a time consuming and very demanding process even in non-pandemic conditions. It requires a lot of expertise.”
On Sunday, the fourth consecutive day of her media briefing on what the Rs20 lakh crore package announced by PM Modi, would entail, the Finance Minister Nirmala Sitharaman declared maintenance, repair and overhaul of aircraft is a big business.
One of Modi’s most-trusted cabinet colleague, Sitharaman said civil aviation in India has the biggest potential for growth and the sector is up for a big leap. Most Indian aircraft themselves go abroad for repairs, spending on parts there and come back to India after the overhaul. “If we make sure MRO eco system is created in India for which the tax regime is already being altered so it favours setting up of MRO, this is a major step we want to make sure India benefits from and in this area, not just civil aircraft, but also defence aircraft can be benefitted.”
Sitharaman added a feel good consumer sentiment by stating, “Maintenance cost of all aircraft will come down and that again will have a ripple effect on passengers. Travellers can perhaps pay less after this.”
Her deputy, Anurag Thakur said India will now be able to make savings in the expenditure of Rs800-Rs2,000 crore over 3 years on aircraft component repairs and airframe maintenance and ensure related employment here.
Defence experts, however, have misgivings about the government’s ambitions related to MRO hub. Abhijit Sinha, director and CEO of Shinmaywa Industries India Ltd, a Japanese firm, said the concept of making India an MRO hub is great but does not hold much promise in the present situation. “The airline industry is currently facing serious survival challenges. Passenger growth and corresponding fleet size growth are important factors contributing to the MRO industry. MRO providers prefer long-term maintenance agreements for activities.”
Commenting on existing capabilities, he said, “Air India and Hindustan Aeronautics Limited (HAL) have the infrastructures for MRO. To begin with, we should utilise these for commercial aircraft instead of dangling a carrot to private players. This can also strengthen the worrying fiscal health of HAL and Air India.” He said MRO service providers in Asia Pacific are concentrated in China, Dubai, Malaysia and Singapore. Simultaneously, Dubai and Abu Dhabi governments have developed MRO hubs. Singapore, a home to over a hundred international MRO companies, is considered the world’s leading MRO centre. It enjoys 3% of global and 25% of Asian market share. Significantly, Singapore is home to original equipment manufacturers (OEMs) of the US, the UK and France who operate either individually or in joint ventures with local companies.”
He explained OEMs are the key to development of MRO market. Hence, favourable policies, strong distribution and technological network of OEM players, development and availability of skilled manpower and its position as a centre for trade will also have to be worked out for successful development of an MRO Hub in India. Perhaps, India can replicate the success of Dubai and Singapore.
In the defence sector, an MRO has meaning only if the number of aircraft being purchased is large. However, with the ‘Make in India’ policy, the government is already implementing it for large ticket purchases and the MRO for the same is embedded in it. For example, aircraft like Hawk, Su-30 the manufacturing in India is being done in HAL and the MRO also exists. For fewer aircraft purchased by Indian Armed Forces, setting up an MRO is not an economically viable option unless the governments are willing to allow the OEMs to service the defence aircraft of other countries.”