The Government of India has extended the window for the re‐export of products imported by maintenance, repair, and operations companies of aircraft and shipping industries, Finance Minister Nirmala Sitharaman said while presenting the full Union Budget for 2024-25 on July 23.
"To promote domestic aviation and boat and ship MRO, I propose to extend the period for export of goods imported for repairs from six months to one year," Sitharaman said in her Budget speech.
She added that in the same vein, she proposes to extend the time-limit for re-import of goods for repairs under warranty from three to five years.
As part of the policy, the government is looking at strategies like production-linked incentives and viability gap funding to boost the manufacturing of commercial aircraft in India.
Re‐exporting is the process of sending back goods imported for specific purposes like jobbing, execution of a contract, servicing/repairing of machineries, display in fair/exhibition, etc.
Re-exporting is also done when indigenously manufactured goods are returned after export and re‐imported for repairing/reprocessing, etc., due to reasons such as defect, not meeting buyer’s requirement, among others.
The ruling National Democratic Alliance has in the past expressed its aspiration for developing India as a manufacturing base for passenger aircraft, promising to revamp legislation and reduce compliance burden for small businesses and traders, including those related to the goods and services tax.
Last month, the 53rd GST council recommended a uniform 5 percent tax on imports of parts, components, testing equipment, tools and toolkits of aircraft, irrespective of their HSN code.
The recommendation notified on July 15 is designed to boost the MRO sector and simplifies a complex tax regime that had applied varying rates of 5 percent, 12 percent, 18 percent, and 28 percent.
The revision of the GST rules is expected to benefit the aircraft maintenance and repair industry in India and also make the environment attractive for aircraft manufacturers to setup base here.
Last year, Prime Minister Narendra Modi, while inaugurating the Shivamogga airport in Karnataka, had said the day is not far when Indians will travel in made-in-India planes.
Several senior ministers and government functionaries stressed that it will not be long before Airbus and Boeing set up final aircraft assembly lines (FALs) in India.
In January, Airbus Helicopters announced that it is partnering with the Tata Group to set up a Final Assembly Line (FAL) for civilian choppers in India, making it India’s first helicopter assembly facility in the private sector.
Under this partnership, the FAL will produce Airbus’ best-selling H125 single-engine civil helicopter for India and export to some of the neighbouring countries, the company had said.
Under this partnership, Tata Advanced Systems Limited (TASL), a subsidiary of the Tata Group, will set up the facility along with Airbus Helicopters.
The proposed helicopter manufacturing facility will be the second FAL to be established in India by Airbus, leveraging TASL’s capabilities in aerospace and defence. The two companies are building the C295 military transport aircraft FAL in Vadodara, Gujarat.
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