With expansion of aviation industry going smooth, time for India to focus on MRO

India's notable expansion in the commerical aviation sector can now allow the country to expand its focus to spare parts and maintenance of aircraft as well, said Jaideep Mirchandani, Chairman of global aviation conglomerate Sky One FZE.

India is a major contributor to the global aviation industry, having a current fleet size of 713 aircraft and an addition of over 1,000 aircraft in the pipeline. These figures, shared by a NITI Aayog report recently, mean that India is on its way to become the third-largest buyer of commercial planes, behind the US and China. Combined with strategic location, lower costs of labour and consistent augmentation in air traffic, the size of India's fleet provides growth potential to the country's Maintenance, Repair and Overhaul (MRO) industry. 

The MRO industry in India is currently at a nascent stage, having stood at $1.7 billion (Rs 14,106.39 crore) in 2021, but is expected to reach $4 billion (Rs 33,191.52 crore) by 2031 at a CAGR of 8.9 per cent vis-a-vis the global average of 5.6 per cent, Sky One FZE shared.

Mirchandani told Republic, "The Indian aviation sector is primed to make huge strides and is expected to achieve robust growth in the near future. As the domestic fleet size increases to meet the demands, we expect a surge in MRO demand as it is a crucial support for any airline’s operations and safety.  Currently, non-recognition of DGCA standards by European authorities has been a challenge for new entrants in the Indian MRO industry. However, I am sure that the authorities will identify and subsequently incentivise to give India a comparative advantage as the current environment is fertile for indigenous manufacturing and maintenance.”

Though airframe maintenance is currently being carried out on the back of Indian MROs, MRO services for engines and components are being procured from abroad. In India, maintenance accounts for the second-highest cost for an airline, with airlines spending about 12-15 per cent of their revenue on it. Mirchandai emphasised that growth of the MROs depends on many factors like the efficiency in value chains, offset clauses, credit accessibility, availability of infrastructure, licensing and certification, taxes/duties and land lease rentals, etc. “Having robust MRO support would reduce foreign exchange outflow, increase employment opportunities and make India the centre for innovation in MRO capability globally. Airline operators would also enjoy reduced costs, better turnaround time and less inventories,” he added.

Earlier this year, Prime Minister Narendra Modi had spoken about the possibility of indigenously developed commercial aircrafts. On this, Mirchandani said, "India has the manufacturing potential to meet the growing demand for new aircrafts as it has been successfully producing aviation components. One of the most significant benefits that India provides to the rest of the world is the availability of highly qualified engineers with the capability of being trained for an array of technical activities." Another potential avenue for growth, he said, is the establishment of assembly lines in India by foreign commercial aircraft manufacturers.

Mirchandani also spoke about redelivery maintenance, stating that it is an important aspect of the MRO requirements of an airline and lessor, especially in India where the sale-leaseback model is common. "I believe that collaborations will aid in enhancing capacity and align the standards in line with the global best practices,however, to realise these aspirational dreams on a large scale, there is a need for significant capital investment and the active participation of both the government and private sectors," he said.