Government Introduces 5% GST on Aircraft and Engine Parts to Boost MRO Industry

The government has introduced a uniform GST rate of 5% on all aircraft and aircraft engine parts, effective from July 15. This initiative, announced by Union Civil Aviation Minister Kinjrapu Rammohan Naidu, aims to bolster India’s Maintenance, Repair and Overhaul (MRO) industry. According to the Civil Aviation Ministry, this decision is a pivotal step towards positioning India as a global aviation hub, promising reduced operational costs, streamlined tax credits, and increased attractiveness for investments.

Previously, varying GST rates ranging from 5% to 28% on aircraft components posed challenges such as an inverted duty structure and GST accumulation in MRO accounts. The new uniform 5% IGST rate aims to eliminate these complexities, simplify the tax regime, and stimulate growth in the MRO sector. Minister Naidu emphasized that this move is a significant boost for the aviation sector and aligns with Prime Minister Modi's vision for an Atma Nirbhar Bharat, focusing on transforming India into a leading aviation hub.

Looking ahead, the ministry projects that India's MRO industry could reach $4 billion by 2030. This policy change is seen as pivotal in developing a robust ecosystem for MRO services, driving innovation, and ensuring sustainable growth. The ministry anticipates that these measures will enhance the competitiveness of the Indian MRO sector, fostering innovation and efficiency, thereby strengthening the overall aviation industry.