Civil Aviation Min seeks service tax exemption for MRO works

To provide a boost to the domestic aviation sector, the Civil Aviation Ministry has sought service tax exemption as well as customs duty relaxation for MRO activities.
In this regard, the discussions with the Finance Ministry have been "encouraging", Civil Aviation Minister Ashok Gajapathi Raju said today.
The Maintenance, Repair and Overhaul (MRO) works of aircraft are mostly done overseas by the local carriers as costs are high in India.
Noting that for the aviation sector most of the things are dependent on imports, Raju said that even for routing checks of aircraft, the planes are being taken to Singapore, Dubai and Sri Lanka.

"We need to pull in the USD 700 million worth MRO business into India. We had consultations (with the Finance Ministry) and it looks encouraging on the issues of service tax and (increasing) the customs duty window from one year to three years," the Minister said here.
According to him, service tax is a notional revenue as far as MRO is concerned, it does not exist but it is discouraging enough for the activity not to come.

"So, we need to find a way where this activity (MRO) gets an exemption (from service tax) and the customs (duty) window is three years on spare parts," he noted.

At present, spare parts of aircraft have to be used within one year of import and for that period they are exempt from basic customs duty.
Discussions with the Finance Ministry have been encouraging and if the states also bring down their VAT (Value Added Tax), it would be practical to have MRO industry in the country, Raju said.
"While taxes are a reality, taxing an economic activity to extinction is not what we are planning," he noted.
The Minister was speaking at a seminar on 'Make In India: Challenges and Opportunities in Civil Aviation Sector'.
With regard to airports, Raju suggested there should be more number of parallel runways.

"Modern infrastructure is also an issue. By modern airports, I mean parallel runways," he said, adding that at present airports at Hyderabad, Delhi and Bengaluru have parallel runways.
On when the new civil aviation policy is likely to be finalised, Raju said, "I don't put timelines for the policy". Policy is not the truth for all times and policy would have a definiteness so that economic activities can be planned, he added.
Minister of State for Civil Aviation Mahesh Sharma, Civil Aviation Secretary R N Choubey and Pawan Hans CMD B P Sharma, among others, were also present.