Govt accords infrastructure status to MRO industry

NEW DELHI: India's nascent industry for maintenance, repair and overhaul (MRO) of aircraft and engines would receive a boost, with the government last week according infrastructure status to it for the purpose of external borrowings, officials said today.

Following a recent change in the RBI policy, the MRO industry, which currently has an annual turnover of about $800 million, would get a boost, they said.

The MRO industry would now on be considered part of the sub-sector of airport in the transport sector infrastructure for the purpose of External Commercial Borrowings (ECBs), according to latest policy change announced by RBI.

The RBI circular, issued on January 6, says "on a review, it has been decided that, for the purpose of ECB, 'Maintenance, Repairs and Overhaul' will also be treated as a part of airport infrastructure.

"Accordingly, MRO, as distinct from the related services which are other than infrastructure, will be considered as part of the sub-sector of Airport in the Transport Sector of Infrastructure."

With a growing aviation business in the country, the industry could potentially achieve an annual growth rate of 10 per cent over the next decade, they said.

It was expected to grow at a faster rate than before, with the expanding fleet size of Indian carriers and the entry of more players in the aviation market.

The global MRO market is estimated to be worth about $50 billion.

Industry sources said policy changes at this juncture to classify the capital-intensive industry as transport infrastructure was "quite timely". Since MRO has a long gestation period, access to foreign debt was vitally important and critical, they said.

With the MRO industry now able to avail ECBs for long tenure and cheaper debts from international markets, the sources said access to cheaper credit in a high interest rate environment in domestic market would improve viability of the industry, leading to a robust growth of this high-tech industry in India.