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Special Articles

measure, the central and state Enhancing We believe that to address cent to 28 per cent, The key framework that ceditable Sustainability processes. This could involve Sustainability Assurance
Meanwhile, as a short-term
including engine
these concerns, the
Reporting practices.
promoting the use of digital
Engagements (SSAE) 3000, 16
governs sustainability
Governments may consider Government can consider components, which Sustainability reporting in India is the tools, data analytics, and Social Audit Standards (SAS
reducing the excise duty and India's MRO several steps. hampers the industry's ‘Business Responsibility and In the above backdrop, artificial intelligence to collect, 100 to 1600), Sustainability
Value-Added Tax (VAT) on ATF, competitiveness. Sustainability Report’ (BRSR) potential focus areas analyse and report Reporting Maturity Model
respectively. This will provide Capabilities • While airlines enjoy introduced by the Securities concerning sustainability ESG-related data. (SRMM) Framework and has
relief to airlines, fostering a customs duty exemption, • Developing policies such Reporting : and Exchange Board of India reporting standards on a also started Certification
healthy aviation ecosystem, components and spares as Production-Linked (SEBI). Recently SEBI revised global level can encompass- Capacity Building Course on BRSR. In 2022,
and boosting tax collections. As India's skies swarm with an required for MRO Incentives (PLIs) for its BRSR format, integrating ICAI hosted the World
Lower tax rates on ATF expanding fleet, robust continue to attract full components and spares, BRSR Core consisting of a set Harmonization and Promoting efforts to enhance Congress of Accountants at
stimulate passenger numbers, maintenance, repair, and duty, making Indian MROs along with tax waivers and India Committed the capacity of companies,
resulting in increased revenue overhaul (MRO) capabilities less competitive. priority sector lending, can of Key Performance Standardization especially smaller and Mumbai, the first ever
and socio-economic growth are now imperative. Ensuring incentivize capital Indicators (KPIs) / metrics Exploring globally recognized medium-sized enterprises, to carbon-neutral Congress.
for states. aircraft safety and reliability • A 0 per cent customs investments in the MRO under 9 ESG attributes. From sustainability reporting effectively report on their
demands significant duty and expedited sector. the financial year 2023-24, the standards to ensure sustainability performance. India’s culture is rooted in
investments in MRO customs processing for Towards a updated BRSR format is to be consistency and comparability sustainability, as it reflects a
Financing and infrastructure and expertise. these critical components • Co-recognizing DGCA used for BRSR disclosure across different companies Regulatory Support philosophy and values that
This effort not only enhances
regulations through
may be considered.
adherence as a part of their
foster a respectful and
and industries.
the Cape Town safety but also fosters job • Ensuring that there are no bilateral agreements and Green Future Annual Reports which is Engaging with governments to harmonious coexistence with
creation and technological
create an enabling regulatory
memorandums of
already mandatory for the
nature and its resources. With
Convention advancement in the aviation restrictions on Goods and agreement between FAA leading 1,000 listed entities Promoting ESG environment that encourages this philosophy and values
Integration in
sector.
Services Tax (GST) input
and EASA can streamline
companies to adopt and
credits for Indian airline regulatory processes. based on market Decision-Making implement high-quality India is well placed to lead the
capitalization. Notably, SEBI
G20 and global agenda of
As India embraces this aviation Presently, MRO is customers can significantly for the World has now outlined that Beyond reporting, the B20 sustainability reporting sustainability.
boom, the need for decentralized because no support the MRO sector. • Establishing guidelines and commencing from the could encourage businesses standards.
infrastructure and policies to single entity controls all policies to facilitate financial year 2023-24 to integrate ESG
sustain growth is evident, given aspects, and critical segments • It is essential to confirm convergence between civil foremost 150 listed entities considerations into their As a key partner for B20
the impending arrival of over are contractually governed by that MRO services and defence MRO sectors shall mandatorily undertake strategic decision-making India, The Institute of
2,700 new airplanes. As lessors OEMs. While India handles line provided to foreign will ensure the efficient reasonable assurance of the processes. This would involve Chartered Accountants of
play an expanding role in and hangar maintenance (Less aircraft flying into India, utilization of available BRSR Core, which will recognizing the business value India (ICAI) is a member of
India's aviation, considering than 20 per cent of total MRO even for transit purposes, infrastructure and capacity. of sustainability and its the ESG Action Council and
he Indian domestic India's burgeoning middle for narrowbody conversions, Navigating robust financing mechanisms is expenditure), over 80 per cent are zero-rated for GST. T oday the world is performance by companies. gradually to be adopted by all potential to drive innovation, actively engages in diverse
e-commerce drives demand
passenger air traffic has class with increasing paramount. However, a critical goes abroad, primarily for This aligns with facilities in In summary, as India's aviation concerned about India, as a growing economy is 1000 companies by the
not only rebounded but has disposable incomes fuels the and the expansion of India's Aviation Fuel challenge lies in the absence of component and engine competing hubs like Dubai sector ascends to new heights, environmental and social taking major steps to 2026-27. risk management, and policy-making endeavors
already surpassed demand for air travel, both electronics manufacturing India's ratification of the Cape maintenance. India missed the and encourages foreign it's crucial to prioritize impact made by businesses. strengthen sustainability long-term resilience. within the B20 framework.
pre-pandemic levels, domestically and industry, especially in Taxation Town Convention, impacting opportunity to localize these carriers to choose India financing mechanisms, taxation The future of global economy reporting framework. The Furthermore, disclosure of The ICAI has been actively
showcasing the pent-up internationally. This prompts higher-value segments, fuels the leasing environment. services a decade ago, for MRO services. policies, and MRO capabilities lies on the path of sustainable evolution of sustainability ESG aspects within the value Stakeholder Engagement promoting sustainability
demand for travel and the airlines to expand their fleets, cargo demand. The Indian Without this ratified treaty, resulting in their establishment • Ensuring a 0 per cent to sustain this remarkable development, as it is reporting, from an voluntary chain will be obligatory for Emphasizing the importance reporting in India through
industry's adaptability. India's benefiting aircraft Government's regional High taxes on Aviation Turbine creditors lack priority in case in multiple foreign locations. airport royalty policy at all journey. Striking a balance paramount to bring activity to a structured and the foremost 250 listed of engaging with stakeholders, various initiatives. One of the
commercial aviation market is manufacturers, maintenance, connectivity schemes open up Fuel (ATF) in India present a of airline insolvency. This The primary challenge lies in Government-owned between growth and strategic Environmental, Social and standardized practice, reflects entities commencing from the including investors, employees, leading initiatives was
set to become one of the repair, and overhaul (MRO) underserved markets, making multifaceted challenge to the scenario introduces a level of component and engine MRO, airports is essential. investments and policies will Governance (ESG) the commitment of the nation financial year 2024-25, on a communities and customers establishment of Sustainability
world's top three by 2041, providers, and related service air travel accessible to a domestic airline industry. ATF risk for creditors who may where most spending occurs. Negotiating a similar ensure that India's aviation comply-or-explain basis. These to understand their concerns Reporting Standards Board
with a fleet size nearly industries. The broader population. accounts for a substantial face potential loss of their However, new aircraft models policy at major privatized narrative continues its upward consideration as the focal to the cause. disclosures of value chain will and expectations regarding (SRSB) in 2020, with the aim
quadrupling since 2019. growth in Additionally, India's positioning portion of airline operating investment should an airline driving local repair stations are hub airports will further trajectory, delivering benefits point of financial reporting to also require limited assurance sustainability performance. of formulating comprehensive,
According to the Boeing as a global manufacturing hub costs, sometimes reaching as default on loan or lease a decade away. Efforts to incentivize the sector. not only to the industry but counter climate change and from 2025-26. These steps globally comparable, and
Commercial Market promises increased investment high as 40-45 per cent, in payments, resulting in bolster India's MRO also to the nation's economy make earth a better place for would mandate the industry understandable standards for
Outlook 2023, South Asia in aerospace manufacturing. contrast to global significantly higher leasing capabilities, especially in • Implementing a minimum and its people. all. to make committed transition Integrating Technology measuring and disclosing
is about to welcome over counterparts with fuel costs in rates for the Indian airlines. components and engines, are GST rate on spares and towards sustainability and Innovation non-financial information
2,700 new airplanes in While India's civil aviation the range of 20-30 per cent. While the Indian Government essential to support the components used for Sustainability reporting reporting. These The B20 could explore how about an entity’s progress
the next two decades, sector outlook is promising, it These high taxes strain is contemplating the growing aviation sector, create MROs is crucial. The standards is a significant topic technology and innovation towards the United Nations
with 90 per cent destined faces some challenges amid airlines' financial viability, ratification of the Cape Town jobs, and enhance current effective GST of discussion within the B20 developments indicate can be leveraged to improve SDG 2030. The ICAI has
for India. This growth rapid growth. As the industry potentially leading to reduced Convention, a clear timeline technological prowess. often ranges from 15 per and the broader business regulators resolve towards sustainability reporting developed Standard on
projection also demands aims for new heights, it must margins, exit from few routes, for this process remains to be community. These standards adopting and put in place
approximately 37,000 pilots navigate a complex airspace of and fare hikes, hindering the determined. focus on the transparency and
and 38,000 mechanics in the obstacles. sector's growth. To alleviate disclosure of ESG
region, largely led by India. this issue, the Government
may consider bringing ATF
under the GST regime at an
optimum rate.
CA. Aniket Talati, President, ICAI

34 ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY 35
QUARTERLY JOURNAL OF ECONOMICS
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