Indian MROs get access to more foreign debt

Singapore
Source:
This story is sourced from Pro
See more Pro news »

India’s civil aviation ministry says a recent policy change will allow the local MRO industry more access to foreign capital.

In a recent Reserve Bank of India circular, the industry was classified under the same category as transport infrastructure, which will allow MROs to enter into longer tenure external commercial borrowings from the international market.

“Access to cheaper sources of credit [amid a high domestic rate environment] will improve viability of the industry and pave the way for robust growth of this high-tech industry in India,” says the ministry.

Despite the move to open up external borrowing, MROs in India say layers of taxes and royalty schemes artificially increase the cost of repair work done in-country. As a result, many carriers send their aircraft to Southeast Asia for heavy maintenance checks instead.

Nevertheless, the ministry says that it expects the MRO industry to grow at an annual rate of 10% over the next 10 years as the country’s fleet of commercial aircraft continues to increase, aided by new entrants.

At least two new carriers are expected to begin operations this year. India AirAsia is waiting for its air operator's permit to be processed and could be launched towards the end of the first quarter, while a joint venture carrier between Tata Sons and Singapore Airlines is scheduled to start operations in the third quarter.