Page 31 - CII Artha Magazine

Sector in Focus

The Bank of England further Industry government has taken several the aircraft systems. Besides, forge strategic partnerships,
alluded that, depending on Policy Rate of Major Central Banks (%) The MRO proactive steps. The MRO there is a regulatory overhang collaborations and acquisitions
what the evidence on the 6.0 5.50 4.0 Potential Guidelines 2021 provide a wherein the MRO providers for building better state of the
economy indicates, it may need 5.0 5.13 clutch of initiatives for one it must comply with numerous art technology for engines,
to raise interest rates again. 4.0 4.25 provides security of tenure regulations and standards of landing gear and major
3.0 As per industry estimates, the and transparency of land different countries. The components maintenance. The
On the other hand, China has 3.5 size of the industry, pegged at leasing through open tenders, non-recognition of Indian availability of a huge pool of
started cutting interest rates to 2.0 3.50 Industry in US$1.7 billion in 2021, is exemptions on airport standards by foreign talented IT professionals should
bolster growth in the economy 1.0 expected to touch US$4.0 royalties on all AAI airports, counterparts, sub scale give us a heads-up in avionics.
which has been hit by a 0.0 -0.10 billion by 2031 registering a for establishment of MRO operations, inadequate capital
property crisis, falling exports -1.0 3.0 CAGR of 8.9 per cent as facilities etc – to develop India investments, low value MRO companies will have to be
Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2022 Q4 2022 Q1 2023 Q2 2023 average of 5.6 per cent. This attract investments to the spare parts, among others can and will need to shift to a digital
Q3 2023 (Jul-Aug) Q3 2023 (Jul-Aug) Q3 2023 (Jul-Aug) Q3 2023 (Jul-Aug) Q3 2023 (Jul-Aug) India- Poised reinforces the potential of sector. be a challenge especially for first operating model which
and weak consumer spending. compared to the global as a global MRO hub and addition, lack of ecosystem for future ready, frugal and efficient
India to become a significant
small players with limited
could enhance operational
US Eurozone UK Japan China (rhs) regional MRO hub and Similarly, the National Civil resources. efficiency, improve service
gradually strive to establish its
Aviation Policy 2016 and other
quality, ensure transparency with
Source: National Sources foothold in the global supply measures like providing Further, the market structure stakeholders with real-time
to take off Indian carriers account for MRO sector, rationalisation of abroad for lucrative jobs such development.
chain.
promotes taking an aircraft
tracking and aid in manpower
infrastructure status to the
as maintenance checks and
GST, removal of Gross
GLOBAL TRADE Export Growth Trajectory Across Major Economies (y-o-y%) one of the largest order books Turnover Tax (GTO), treating overhaul given that the Indian There is a need for creating a
GROWTH REMAINS 40.0 40 of aircraft manufactures. With transactions sub-contracted by fleet is lease based. This is a talent pool with cutting edge
WEAK the 470 aircraft on order by foreign OEMs and MRO lost opportunity for the Indian technological and engineering
Tatas (Air India) and another companies to domestic MROs MRO sector. capabilities. For this incremental
20.0 20 500 aircraft by IndiGo, the as exports with zero-rated steps such as joint ventures with
Trade continues to be a key Indian aviation sector is poised GST, waiving custom duty on established global MRO players,
driver for building resilience 3.9 for exponential growth that tools, toolkits and spares Way Forward focus on MRO segments with
in the global economy, but it 0.0 -0.5 -4.0 0 will inevitably create a imported by MROs, and lower IP control (electrical and
will remain under pressure in -7.3 -4.3 Introduction airframe maintenance significant demand and market permitting 100 per cent electronics, avionics, structural
2023 due to the softening of -20.0 -20 functions. However, the major for repair and maintenance Foreign Direct Investment The Government has taken repair, etc.) and a gradual shift
global demand. This makes it Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 he maintenance, repair, segment of MRO operations capability within the country. (FDI) through the automatic proactive measures and many towards the higher end of the
even more important for T and overhaul sector i.e., engine and component In fact, according to industry route, etc. are some of the of the constraints faced by the MRO value chain (such as
MRO services which are
governments to avoid trade US Eurozone UK (rhs) Japan (rhs) China (MRO) ensures the safety and capital intensive and fiercely reports, India is poised to be other key interventions to MRO industry have been manufacture of landing gears,
fragmentation and refrain Source: National Sources airworthiness of aircrafts restricted by OEMs through the third largest civil aviation attract investments to the addressed and steps taken to etc.) need to be taken.
from introducing obstacles to through repair, service, and IPRs are largely procured from market in the world by 2026, sector. boost the sector. As the sector
trade. inspection. Moreover, it which clearly throws up evolves, further interventions There is thus strong case for the
trade volume of goods and abroad. Hence, about 80-85 sufficient opportunity for may be required to propel Indian MRO sector to build scale
services to slow from 5.1 per constitutes the second highest per cent of MRO growth and expansion of MRO growth in the sector. However,
Global trade growth in 2023 Outlook cost of operation of airlines requirements in India are Challenges to effectively compete
is expected to be subpar cent in 2022 to 2.4 per cent after ATF. As such, the currently met through imports facilities in India. at this point of time it is for internationally for which it
despite a slight upgrade in in 2023, while the volume of Global outlook remains year. Although a slowdown development of indigenous or done abroad. This only the private corporate sector should tie up with large scale
GDP projections since last exports of goods and services highly uncertain amidst the in China’s economy in capacity in MRO sector shall underpins the need to develop The availability of a rich and Due to various historical to leverage the conducive anchor companies to take a lead
reasons and the trade
policy sphere and India’s
fall. Weighed down by the is expected to fall to 2.5 per lingering war in Ukraine, recent weeks is likely to play a pivotal role in and channelize domestic diverse pool of skilled practices of the global OEMs dominant position in the in the global market.
workers, engagement with
effects of war in Ukraine, cent in 2023 from 4.8 per high level of inflation and pose as a challenge to revitalizing the Indian aviation capabilities in the segment. redelivery maintenance the MRO players in India face global order book of the To conclude, the MRO sector in
stubbornly high inflation, cent last year. continued monetary global demand. The sector and shaping its growth. contracts and favourable formidable challenges which aircraft manufactures, to seize India is presented with a huge
tighter monetary policy and tightening undertaken by developed economies, on The presence of an efficient policy interventions of the come in the way of the the opportunity. First, the opportunity to support the
the central banks to tackle
financial market uncertainty, Further, as per the latest inflation. The above stated the other hand, would MRO sector would be critical government shall be further sector’s growth. For instance, existing players need to growth of Indian aviation. India
the volume of world quarterly data, exports have reasons are likely to continue to post slower for the sustainability of the catalysts for spurring growth Indian MROs find it difficult to expand the MRO capacities to shall surely seize this golden
merchandise trade is started to lose momentum as dampen the growth growth. Moreover, as aviation industry and in the of the domestic MRO sector. establish a presence in the India to cater to the large opportunity to eventually
inflation trajectory is
expected to grow by 1.7 per the global economy has prospects of economies moderating from its peak, process it would create wealth existing global value chains number of aircrafts under emerge as a global hub for
cent this year, decelerating sustained multiple shocks across geographies in the we can expect central and employment in the Policy comprising OEMs, established order and make provisions for aviation maintenance. The
country.
from 2.7 per cent growth in such as ripple effects from the current year. However, banks across the world to MROs and airline operators. more land to be acquired for question is not Will? It is When?
2022, as per the latest report war and the related food & there are signs of growth lower the pace of interest The MRO sector has four Moreover, due to the brain the development of additional
by World Trade Organisation energy crisis. Import demand recovery in developing rate hikes going forward major segments namely- line, Initiatives drain to the middle East airport infrastructure,
(WTO). too started to soften as the economies with India and or even look at a pause, impediments are also faced including the creation of MRO
growth slowed in major China expected to components, engines and due to paucity of experienced facilities at the site.
economies. which would further airframes maintenance. Of Responding to the pressing engineering, design and
The IMF, too, has warned that contribute a major chunk propel demand. these four segments, the requirements for a robust
global flow of goods is to the global growth this Indian MROs are competently Shri Piyush Srivastava, Senior Economic Adviser MRO sector to support the technical manpower who can The time is now ripe for the
levelling off. It expects the performing the line and & Additional Secretary, Ministry of Civil Aviation aviation industry, the negotiate the complexities of domestic MRO industry to

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