India has standardised the goods and services tax (GST) rate on aircraft components and engine parts at 5%. The change, which took effect on July 15, is designed to boost the local MRO sector and simplifies a complex tax regime that had applied varying rates of 5%, 12%, 18%, and 28%.
"The integration of a uniform 5% integrated GST on MRO items is a major boost for the aviation sector," said Civil Aviation Minister Kinijrapu Rammohan Naidu. "Previously, the varying rates created challenges, including an inverted duty structure and GST accumulation in MRO accounts. This new policy eliminates these disparities, simplifies the tax structure, and fosters growth in the MRO sector."
"Our vision is to transform India into a leading aviation hub," he continued. "The Indian MRO industry is projected to become a USD4 billion industry by 2030. This policy change is a crucial step towards building a strong ecosystem for MRO services, driving innovation, and ensuring sustainable growth."
India's high GST on aircraft components and engine parts has historically had a dampening impact on the local MRO industry, with potential customers often choosing to have work done on their aircraft elsewhere because of the high tax rates.
