Directorate-General of Civil Aviation (DGCA)
approved Air India’s Nagpur maintenance, repair and overhaul (MRO) unit,
expected to give the national carrier Rs 750 crore in revenues in the next
financial year.
The new MRO facility is expected to be operational
in three months. The engineering department of the airline was hived off from
Air India as a separate MRO unit to a fully-owned subsidiary company - Air
India Engineering Services - to provide maintenance services for Air India
fleet as well as that of customer aircraft, engines and components. The setting
up of the new company was part of a turnaround plan approved by the Centre.
However, the division's success will depend on
whether the government relaxes tax rules for the MRO business and how well the
carrier markets its services to secure third-party business, aviation experts
said.
While Air India carries out routine maintenance work
for several domestic and foreign airlines, major overhaul of engines and
airframe work on Indian planes is done abroad because it costs 30-40 per cent
less outside India. The MRO sector has been lobbying with the government to do
away with the value-added tax on spares and the service tax on MROs - two taxes
which make the business in India non-competitive.
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