The Indian aircraft maintenance, repair, and overhaul (MRO) industry is projected to witness a 50% growth in revenue, reaching Rs. 4,500 crore (US$ 521.38 million) by FY26. This growth will be driven by an expanding fleet size of domestic airline operators, according to a report by the ratings agency Crisil. Based on three major MRO operators accounting for 90% of the sector's revenue, the agency's study highlighted the positive impact of reduced Goods and Services Tax (GST) on aircraft components and services. This reduction not only improves the competitiveness of Indian MROs relative to global players but also alleviates working capital constraints.
The domestic fleet is expected to grow by 20-25% by the next fiscal year, aided by new aircraft additions and the return of grounded planes. The MRO sector primarily provides line, airframe, and redelivery checks. As the fleet size increases, demand for these services will rise, with redelivery checks projected to increase up to 10 times over FY24 levels. Crisil noted that while Indian MROs currently manage only around 14% of the total MRO spending by domestic carriers, this share is expected to rise as capacity constraints are addressed. Local capabilities for aviation spare parts and workforce training are developed. This growth, coupled with higher margin redelivery checks, will lead to a profitability improvement of approximately 20% by FY26. The improved credit profiles of MRO players will also be supported by better cash flows and reduced working capital cycles.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.