The key focus of the fourth tranche of Aatmanirbhar Bharat economic package is structural reforms in coal, mining, defence, civil aviation, space and atomic energy . As part of the economic restructuring packages the Finance Minister has made significant announcements for the Aviation Sector. FM announced that the reforms in this Sector, pertain to three broad categories including rationalisation of airspace, auctioning of Six more new airports in the PPE model and making India a MRO (Maintenance, Repair and Overhaul) Hub for airplanes.
Easing of restrictions on the utilisation of Indian Air Space will enable civilian flying to become more efficient. Rationalisation of the airspace will result in saving travel time, fuel, pilots’ flying time. This is also an environmental step that will have huge impact on India’s fuel import bill and on emissions. Six more airports have been identified for second round of bidding. Additional investment will also happen in 12 airports for better world class facilities. However out of the above , making India an MRO Hub is extremely significant. Today most of our aircrafts — civil and defence — fly abroad for repairs. With the rationalisation of MRO ecosystem to favour repairs and maintenance in the country, by attracting investors the economic benefits will be exponential. This will bring down the maintenance cost of all airlines, which will have a ripple effect for the passengers with hopefully reduced fares.
Also defense and civil aviation sectors can work in coherence to bring in economies of scale. Additionally this is also extremely relevant in the context of the anticipated increase in the number of both cargo & passenger flights all over the world especially in Asia. Before COVID it was estimated by the authors in “Global Fleet & MRO Market Forecast Commentary “ published in January 2019 that by 2029, the Asia Pacific fleet, including China and India, will account for nearly 40 percent of the global fleet. Between 2019 and 2024, the MRO market was to grow at a CAGR of 3.4 percent, increasing MRO spend to $96.9 billion. The market in the next five years would accelerate slightly—3.7 percent annually on average. Undoubtedly the impact of COVIDV will decrease these projected figures. But if the policy favours setting up the MRO Hub, then major engine manufacturers like Rolls-Royce, Pratt & Whitney, GE would be encouraged to set up their engine repair facilities in India in the coming years. In this context rationalisation of the tax structure as announced by the FM will go a long way in attracting investors.
India has capacities & manpower. Therefore India can be a repair centre & MRO Hub for flights which go to southeast Asia, Australia and westwards too.
ABA ushers exciting prospects for redefined Make in India. We not only welcome indigenous designed and developed products and technologies but also local manufacture of foreign designed products.
Make in India by Indian companies, whether Indian owned or foreign owned. FDI reforms are welcome to the extent it results in greenfield manufacturing repairs and logistics facilities in India. When there is no hesitation in importing defence hardware, why hesitate giving foreigners majority control in Indian companies setting up greenfield facilities in India. Since large investments are required, investors’ reasonable concerns have to be taken on board.
Hopefully we will see a flurry of reforms improving the ease of doing business and reducing the cost of doing business in India.
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