Union Civil Aviation Minister Kinjrapu Rammohan Naidu announced the implementation of a uniform IGST rate of 5 percent on all aircraft and aircraft engine parts, effective from July 15. 

The decision marks a significant milestone for making India’s Maintenance, Repair and Overhaul (MRO) industry a global aviation hub as it will lead to a reduction in operational costs, resolve tax credit issues and attract investment, the Civil Aviation Ministry said in a statement. 

“The introduction of a uniform 5 percent IGST rate on MRO items is a major boost for the aviation sector. Previously, the varying GST rates of 5 percent,12 percent, 18 percent and 28 percent on aircraft components 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,” Naidu said. 

“Under the guidance of Prime Minister Modi, we are committed to the Atma Nirbhar Bharat initiative. His support for transforming India into a leading aviation hub has been crucial in driving this policy forward,” the civil aviation minister added. 

Highlighting the future prospects, the minister said that the Indian MRO industry is projected to become a $4 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. 

The ministry is confident that this move will significantly enhance the competitiveness of the Indian MRO sector, fostering innovation and efficiency, and creating a robust and efficient aviation sector, according to the official statement