MRO industry loses 90,000 jobs to exports, demands 5% GST

January 18
23:29 2019

The MRO industry has claimed that they have lost a massive 90,000 direct jobs to overseas markets like Sri Lanka, Singapore, Thailand, France and Germany and blamed the “lop-sided” tax policies for this and has sought a level-playing field on this front.

Urging the government to bring down GST rate on the maintenance, repair and overhaul (MRO) services to 5 percent from the present 18, the MRO Association of India has also expressed fears of a “shut-down” of the industry if the “anomalies” were not fixed on priority.

“With 90 percent of the MRO requirements being met from outside, the industry has lost around 90,000 direct jobs to Sri Lanka, Singapore, Thailand, France and Germany,” the association said in a statement Friday.

The association’s claim assumes significance in the wake of the Centre for Monitoring Indian Economy, an independent think-tank, recently estimating that a whopping 1.10 crore jobs were lost in 2018 alone, with the rural sector being the worst hit.

“Of the several requests we are making to the aviation ministry, our highest priority is to get the GST rate reduced to 5 percent so that it is brought on par with foreign MRO services,” association president Bharat Malkani said.

At the same time, the customs duty on MRO services should be applied at 18 percent on all imports, the association added.

“All we are asking for is a level playing field if the MRO industry has to survive in the country,” Malkani said.

Lamenting that the industry has registered a negative growth in the current fiscal, Malkani said while there is an 18 percent GST in the country, Singapore and Malaysia charge just 7 percent taxes and in Sri Lanka there is no taxation at all on these services.

Claiming that domestic MRO industry has more than adequate capability for airframe services, the association said of the total MRO spend of around Rs 31,500 crore in the past five years, airframe MRO constituted around 27 percent at Rs 9,450 crore during this period.

“This is the direct revenue loss in foreign exchange to the government. Besides, a sustainable ecosystem in terms of component overhauls is being also neglected, jeopardising its future, association vice-president Ravi Menon said.

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