High taxation policy, lack of clarity on land allotment and significant shortage of skilled labour are impeding India's emergence as a global hub for aircraft maintenance, repair and overhaul (MRO) operations, according to an Assocham-Yes Bank study.
"Airlines in India are taking their aircrafts to Dubai, Malaysia, Singapore and other MRO locations for major checks and servicing of their aircraft and only minor checks are being held in-house," the study pointed out.
The study further highlighted that a high taxation policy comprising import duties, value-added tax and service tax was proving to be a stumbling block for the country's emergence as an MRO hub.
"There is a need for third party maintenance and overhaul to support the requirements of domestic airlines," Assocham Secretary General D S Rawat said.
Growing at a compounded annual growth rate of over 13 per cent, the MRO industry in India is likely to reach Rs 7,000 crore by 2020. However, it would still fall behind global peers like UAE and China where the MRO industry's annual turnover is around Rs 8,000 crore and Rs 10,000 crore respectively, the study pointed out.