- 16 Jul 2024
- ICICI Securities
GOVT ANNOUNCES UNIFORM 5% IGST ON AIRCRAFT, ENGINE PARTS
News: Ministry of Civil Aviation announces the implementation of a uniform IGST rate of 5% on all aircraft and aircraft engine parts, effective from 15th July 2024. Earlier, IGST rates on all aircraft & engine parts were ranging from 5%-28%. The decision taken is to boost the MRO (maintenance, repair & overhaul) industry as it aims to reduce operational costs, resolving tax credit issues, and attracting investment.
Views: With the simplification of tax structure, we believe that the MRO industry (for aircrafts & aircraft engines) is expected to benefit substantially from this development. As per the industry reports, Indian commercial aviation MRO industry is projected to reach $4 bn by 2030 (from $2 bn estimated at present). The move is also in-line with the govt's vision of making India a global aviation hub through building new airports in tier-2 & tier-3 cities. Companies like Hindustan Aeronautics (HAL), Dynamatic Technologies, TAAL enterprises, DCX systems are expected to benefit from this development.
Impact: Positive