Government’s proactive intervention with Maintenance, Repair and Overhaul (MRO) policy would generate an investment worth Rs 35,000 crores within next 5 years in aviation space. Being the 3rd largest domestic aviation market in the world, the segment witnesses USD 3 mn FDI inflow, thus proving to be a high potential zone for business development.
New MRO policy is aimed at attracting investments, said Mr Piyush Shrivastava, senior Economic Advisor, Ministry of Civil Aviation. Speaking at the session on Aviation Infrastructure at the EAST INDIA SUMMIT organized by CII digitally, Mr Shrivastava provided a rough outline on new MRO Policy for civil aviation aimed at attracting investments. Government of India, has revived the policy on MRO, by leasing of land through open tenders, he said. Other than various benefits, MRO services would be set up for an extended period of 30 years instead of 3-5 years. To initiate further investment in the MRO segment, Government of India has identified 8 airports namely Begumpet, Bhopal, Chennai, Chandigarh, Delhi, Juhu, Kolkata and Tirupati.
Government’s proactive intervention would generate an investment worth Rs 35,000 crores within next 5 years in aviation space. Being the 3rd largest domestic aviation market in the world, the segment witnesses USD 3 million FDI inflow, thus proving to be a high potential zone for business development. With the nation surging ahead with ambitious projects on reviving aviation infrastructure, Rs 490 cr has been invested in Agartala Airport in East, for building new terminals. The MRO policy is sure to boost investment and cater to new horizons of investment along with elimination of royalty. Discussing further, Mr Shrivastava also mentioned about GST Council’s decision to reduce GST on MRO services to 5%, last year. Government has left no stone unturned to integrate East with national aviation ecosystem, he added. An investment of Rs 48 crore has been sanctioned for Jagdalpur, Rs 27 crores for Ambikapur and Rs 33 crore for Bilaspur under UDAN scheme for up-gradation and development of three airports in Chhattisgarh.
Mr Shrivastava predicted investment in MRO to boom upto USD 4 million by 2030. According to the Senior Economic Advisor, Ministry of Civil Aviation, Government of India, the demand for air cargo transportation has increased significantly over the last few years especially during pandemic, because product life cycles have shortened whereas demand for quicker delivery has increased. Changing business models such as Just- in-Time Manufacturing and Global out sourcing models have been integral segments for air cargo logistics business. Referring to Union Budget 2021-22, Shri Shrivastava mentioned about customs duty being reduced from 2.5% to 0% on aviation sector components or parts, including engines, for manufacturing of aircraft by Public Sector Units of Ministry of Defence. This initiative shall catalyze the aviation industry in the nation by reducing cost of inputs for domestic manufacturing and thus promote self-reliance. To boost agriculture value chain as well as exports, the scope of ‘Operation Greens Scheme’ currently applicable to tomatoes, onions, and potatoes, has been enlarged to include 22 perishable products. The convergence of Krishi Udaan Scheme with Operation Greens generates incentives in terms of air freight subsidy of 50% for the agri-perishables of North Eastern States and 4 Himalayan States or Union Territories. The expansion of product-coverage shall catalyse the Krishi Udaan Scheme as well as improve air cargo transportation from these States.
“The potential in travel and aviation is immense in the east and north east and needs to be leveraged to reach the reality of it, “ Mr Ronojoy Dutta, Chief Executive Officer, InterGlobe Aviation Limited (IndiGo) said while joining the deliberations of the virtual conference on Aviation Infrastructure at the first edition of CII EAST INDIA SUMMIT. Mr Dutta said that the region’s geography should be leveraged and the focus can be on Buddhist Circuit and Medical Tourism. At the same time, there is a need for a “comprehensive plan and a strong ecosystem” to actualize this potential, he added. Mr Dutta reiterated that the infrastructure issues of the region need to be seriously looked into and the potential needs to be worked on keeping “geography as the lynchpin.” He suggested that the need of the hour is to pick a particular vertical and build an ecosystem around it to further the aviation and tourism possibilities of the region. Mr Dutta said that the focus of the airlines stakeholders is now on climate change as aviation contributes to 3% of the global aviation. The aim is now to reduce emissions, increase use of sustainable fuel and offsets, the CEO of InterGlobe Aviation said. In terms of travel during the pandemic times, Mr Dutta said it is now a good time to rationalize COVID protocols.
Mr Sunil Bhaskaran, Chief Executive Officer, Air Asia said that Two industries that have been hit worse by COVID – aviation and hospitality. While most of the industry has come back to 90 per cent of pre-covid levels, aviation is still lagging behind, he added. Inspite of being hit so hard, this geography in India got its acts together very fast once flying resumed end May 2021, Mr Bhaskaran said that the Indian Government, Airlines, airports, departments of ministries did a fantastic job, managing change and all protocols were put in place quite fast. According to Mr Bhaskaran, deployment of digital was fantastic and electronic web checking has become 95 percent post COVID reopening. Though the traffic deployment has come back to almost 50-55% post the second wave, Mr Bhaskaran called for cautiousness in face of a probable third wave. He also said that as per DGCA reports, the East and North East has picked up higher than rest of the country. Deliberating on the potential of the aviation space in the East & North East, Mr Bhaskaran emphasized that the costs of flying into East and North East is very high and the VAT needs to be reduced by the states to attract more flights.
Speaking at length about the relief and evacuation operations that Emirates has undertaken globally since the pandemic hit the world, Mr Mohammad Sarhan, Vice President, Emirates Airlines said that Emirates has restarted 90% of its operations under bubble agreements and have introduced waivers to attract more flyers. Though air bubbles and safe corridors are in place for safe global travels, with the vaccination programmes running successfully, the bubble agreements need to be relooked and relaxed though COVID appropriate protocols need to be in place, Mr Sarhan opined. He further said that Kolkata is the “gateway” for both passenger and cargo of Emirates and is an important destination for them. Quality comes at very reasonable price, he said. Mr Utsav Parekh, Director, Bengal Aerotropolis said Government of West Bengal and Changi airport as equity partner of the Greenfield Kazi Nazrul Islam airport of Bengal Aerotropolis have handheld a lot. Government of India plans to invest $1.8 bn in next five years, he informed and he felt that further private investment will be a fillip. Waiver of charges like ATC (Air Traffic Control) charge will be required to boost the sector. Mr Sidharath Kapur, Board Member, Noida International Airport was of the opinion that India has most successful airport privatization plan. Infrastructure will bring more volume he was of the opinion, citing that, before privatization 700 crore revenue was generated, whereas after 2017, Rs 2000 crore revenue was shared. Bundling of loss making airports with profit making is not a good proposition, he felt. Mr Matthew Butters, Deputy Chair, British Aviation Group was of the opinion that maximising the relation with customers is the key to success and providing aeronautical service not only inside the airport but also outside is important.