A Journey Towards Self-Reliance

A decade back the aerospace maintenance, repair and overhaul (MRO) industry in India was a no-show. With just 3-4 major independent MROs struggling to make ends meet with basic airframe and line maintenance, there was nothing to talk or look forward to in Indian MRO circles. Fast-tract to today, when the Indian MRO industry is one of the fastest growing sectors of the world. Within a span of a little over a decade, the Indian MRO industry has grown by leaps and bounds and continues to grow at a super-fast speed. How did this transition happen? Why is the world suddenly started taking interest in investing in India’s MRO infrastructure and capabilities? Let us find out.

“The MRO industry in the country is expected to go up to $4 billion in seven years from the present $2 billion. Thus by 2030 India will develop a strong ecosystem for MRO services, driving innovation, and ensuring sustainable growth,” just as India’s Minister of Civil Aviation Rammohan Naidu said these words during question hour in Lok Sabha recently, the entire world’s focus increased on India’s MRO sector with just one question – How?

The government had the answer ready. India’s minister of civil aviation is leaving no-stone unturned to encourage the airline MROs, independent MROs as well as oversees MROs and OEMs to come and invest in India. In fact, experts believe that MRO is the current pet project of MoCA and he fully intends to take it through. As a testimony to this, he rapidly changed some of the regulations stuck in red-tape like introduction of a uniform five per cent IGST rate on MRO items, introduction of 100 per cent FDI in MRO sector etc to name a few. The MRO fraternity in India welcomed this move with open arms. But is this enough to develop a sound $4 billion MRO ecosystem that India aspires? Definitely not! But its still a small and significant step towards achieving this goal.

THE ENTRY OF FOREIGN MROS IN INDIA

Dassault Aviation is currently in the process of land acquisition near the upcoming Noida International Airport to establish a facility for the maintenance and overhaul of Rafale and Mirage 2000 fighter aircraft. This will allow India’s armed services to maintain their Rafale and Mirage 2000 fleets in-country. Dassault is already sourcing multiple titanium parts from various local companies in India with plans to add more local vendors to its supply chain. This will strengthen the overall aerospace manufacturing and MRO ecosystem in the country while realising the government’s Atmanirbhar Bharat initiative.

Belagavi-based aerospace manufacturing provider Aequs Aerospace recently signed memorandum of understanding with Magellan Aerospace to develop a business plan for engine MRO in India. The plant will be based in the Belagavi aerospace cluster (BAC) with plans of a full-fledged engine MRO complete with an engine testbed and ability to rebuild an entire engine along with component repairs.

With 2,200 LEAP engines on order in the region, Safran is building one of its largest MRO facilities in the world in Hyderabad. Construction of this €150 million plant started late last year with the objective of being fully operational by 2025. The MRO shop will be the first of its kind opened by an OEM in India, putting India on the global MRO map. The MRO ecosystem is a major step toward achieving self-reliance in airline operations and developing the associated skills and training infrastructure. Safran further plans to develop synergies with the local aerospace ecosystem. Some of the other investments by Safran include setting up a helicopter engine MRO facility with HAL in Goa and establishing a LEAP engine MRO plant to support Indian airlines in Hyderabad, both by 2025. Safran is also working closely with HAL to co-design the next-gen turboshaft engine for HAL’s medium-lift helicopter.

Currently in India only AI Engineering Services (AIESL), the erstwhile engineering arm of Air India prior to privatisation has a complete engine MRO set up with capabilities for a complete engine overhaul. But eyeing the huge aircraft orders and rising demand, the need for more engine MROs was evident and the world saw a huge gap in the space. Now entry of players like Aequs Aerospace and Safran in India’s aircraft engine MRO market will pave way for more OEMs like Pratt & Whitney and Rolls-Royce to establish their own engine MRO shops along with various thirdparty MROs to establish JVs with their local counterparts in India.

Recent media reports also said that StandardAero was looking at potential partners in India to establish a JV and that the company will take a decision based on the engine workload at Safran’s Hyderabad facility.

Israel Aerospace Industries also in talks with two Indian partners, one of them is reportedly Hindustan Aeronautics Limited (HAL) for setting up a widebody passenger-to-freighter conversion centre in the country along with long-term MRO plans.

Air India has roped in SIA Engineering Company Ltd (SIAEC), the engineering arm of Singapore Airlines for developing the base maintenance facility at its new MRO in Bengaluru. As per the plan, SIAEC will plan, construct, develop and operationalise the Bengaluru facilities. Such a JV-model is extremely lucrative as it will provide the airline – ‘Air India’ with capabilities, training, etc while working with SIAEC, while the MRO will gain a ready-made entry in India’s MRO market.

Epsilon Aerospace the aircraft interiors specialist signed a memorandum of understanding with Netherlands-based structural metal and composite component repair provider 4Repair to establish a facility focusing on MRO services for composite parts. Both the companies are currently exploring different locations across India to establish the facility.

CHANGING MRO TRENDS

Until recently most of the airlines in India used to send their aircraft abroad for maintenance work leading to the airlines spending exorbitant but necessary funds on the maintenance work. This picture is also witnessing a drastic change as airlines in India are either developing their own capabilities to take care of MRO work of their own fleet or sending their aircraft to local- third party independent MROs. On a positive note, almost 99 per cent of the airframe maintenance, line maintenance work is carried out within India for domestic carriers.

But certain airlines like Air India are going a step ahead and setting a benchmark in establishing its own in-house maintenance capabilities. The recent ground-breaking of MRO facility at Bengaluru airport is a testament of this process. The airline has already developed its in-house line maintenance capabilities for a variety of aircraft right up to the DGCA approval for the latest widebody A350 aircraft. Apart from the huge 350 acres MRO facility in the Kempegowda cluster in Bengaluru, Air India has also refurbished its widebody hangar in Mumbai and is about to open two huge widebody hangars in Delhi. Thus, the airline is already begun its preparation for the widebody aircraft influx.

Other airlines like IndiGo are focussing on various non-critical elements in the aircraft like paper, soap dispenser, the stickers, etc some of the basic items found in the galley. A couple of years back, IndiGo had approached DGCA for approvals of non-critical items in the aircraft. The airline found that the regulator was extremely welcoming in their approach and even encouraged the airline to go in for the manufacture and use of as many non-critical components as possible. Fast-forward to today, IndiGo uses in-house papers, stickers etc, instead of importing these items thus mitigating costs. This initiative by IndiGo’s initiative to seek approvals for using indigenous non-critical parts reflects a shift in maintenance practices.

UPCOMING MRO FACILITIES IN INDIA

Apart from the Air India Bengaluru MRO facility, another huge aerospace and MRO cluster is under development at Noida International Airport. Noida International Airport will have both an MRO facility (40-acres) within the airport and a larger facility (MRO-hub) on 1,365 acres of land adjacent to it. The process of land acquisition is currently underway. Once the land acquisition is complete the government will hand over the land to NIAL for further development.

The Noida International Airport (NIAL) have fast-tracked the process of developing an MRO facility at the airport and has issued a global tender for hiring a company to develop the 40-acre airport MRO facility. The work on this MRO facility is expected to start in the next two to three months. This facility will be part of the aviation hub and will be developed on the premises of the airport in the ongoing phase.

In order to encourage oversees investment, the government of Uttar Pradesh has also introduced a new MRO policy offering capital investment subsidies ranging from five per cent to 12 per cent for companies that submit their application by December 31, 2024. The new MRO policy developed by the state to attract investors will include a capital investment subsidy of:

• five per cent for investments up to ₹500 crores
• eight per cent for investments over ₹500 crores but less than ₹1,000 crores
• 12 per cent for investments exceeding ₹1,000 crores, subject to a maximum of ₹200 crores.

Other upcoming MRO facilities are those at Belagavi airport in Karnataka, Bhopal airport, Bhogapuram airport and Tirupati airport.

The Bhogapuram MRO facility will be spread over 25 acres, featuring aprons, aircraft washing areas, airside and landside circulation, hangars, engine run-up bays, and support facilities. The MRO facility will be constructed on the western side in phase one, with plans for future development phases to include expansion to the northeast corner.

The TDP proposed the MRO during its tenure of power from 2014-2019. Of the total 2,700 acres earmarked for the Bhogapuram airport project, 500 acres were allocated for the MRO facility. However, the YSRCP government, after coming to power in 2019, shelved the proposal and kept aside these 500 acres for other purposes, causing delays in the MRO project development.

The groundbreaking ceremony for Bhopal airport’s MRO facility took place in October 2022. Two MRO facilities will be constructed at Bhopal airport over an area of 5,600 square metres at an investment of ₹300 million. This project is based on the design-build-operate-maintain-transfer (DBOMT) model. The work on the Bhopal MRO project is currently underway although slightly delayed. The facility that was due to be operational by 2024, is now expected to open for commercial operations over the next couple of years.

Meanwhile, the work on the MRO facility to be developed on Tirupati airport gained momentum in 2023 with the site-visit by a Canadian company about a year back in August 2023. The overseas OEM seemed interested the viability of MRO project at Tirupati airport and conducted a feasibility study for the same. The concept of an MRO centre at Tirupati International Airport has been in the works for some time, with discussions done between local authorities and the civil aviation ministry. Canadian aviation would submit their proposals to the central government. Meanwhile, the Airports Authority of India (AAI) floated a tender for leasing of land for the MRO facility on Design, Build, Operate, Maintain and Transfer (DBOMT) basis at site-2 of Tirupati airport.

Land at Belagavi airport was awarded by AAI to Aviation Connectivity and Infrastructure Developers Private Limited in November 2022. In 2022, in order to capitalise on the enormous potential of the MRO sector, the civil aviation ministry identified sites for implementation of MRO at eight airports across the country including Chandigarh, Delhi, Begumpet, Juhu in Mumbai, Bhopal, Chennai, Kolkata and Tirupati.

CIVIL-DEFENCE CONVERGENCE

According to experts, India has huge Defence MRO capabilities, but most of them cannot be used by the civil sector due to certain regulations and restrictions. There is an invisible wall between the civil and defence MROs in India with little sharing of expertise, technology, or manpower leading to unnecessary duplication of infrastructure and capabilities. While on the other hand, India’s civil aircraft are being sent aboard for the lack of enough capability and capacity in the civil MRO sector. This sowed the seeds and was the basic central idea behind the civil-defence convergence in MRO space.

Recognising the need for integration, the Government announced plans in 2020 to promote Civil-Defence convergence to seek enhanced coordination and integration, driven by the vision of self-reliance. However not much has achieved since then, and the major hindrance to this is the regulatory authorities. The defence MRO in India comes under DGAQA - Directorate General of Aeronautical Quality Assurance, under the Department of Defence Production while the civil MRO comes under DGCA - Directorate general of Civil Aviation. The terms and conditions of these two independent bodies, their regulatory framework etc is proving to be major challenge in the convergence of Civil and Defence MRO capabilities in India. Realising this, the government and stakeholders of both civil and defence MRO circles have come together to establish one uniform regulatory body for both MRO sectors. This will prove to be a turning point in the civil-defence convergence plan of Indian MRO ecosystem. Advantages:

• enhance customer satisfaction at lowest cost and less time
• revenue and employment generation
• save fuel and logistic costs, and conserve foreign exchange for airlines
• share and exchange the resources, technology, manpower and tools etc
• optimum utilisation of resource on exchange basis for both civil and defence
• maximum utilisation of infrastructure and other support system.

OTHER CHALLENGES

In spite of growing passenger traffic and considerable fleet size, the Indian MRO sector continues to face certain bottlenecks. One of the major factors for this is the OEM dominance in the aftermarket and their ability to grab and capture a huge chunk of the market due to their control over Intellectual Property (IP). Thus, the OEMs control training manuals, data design, critical component repairs, engine overhaul, basically every repair that is cost-inductive for the airlines, leaving little or no-scope for the airline MROs or independent MROs to grow and develop their capabilities.

Here’s where the critical role of airlines comes in. With the humongous aircraft orders placed by Indian airlines, India is now in the position of power and authority to negotiate its terms with the OEMs as well as the lessors based on cost-effectiveness as well as capability development and technology transfer. Thus, airlines can play a huge role in developing the MRO in the country. The airlines need to urge and insist the OEMs to establish 70-80 per cent the MRO facility within the country for their upcoming fleet. Accordingly, efforts should be made to include the provisions in the aircraft contract. Technology transfer for repair/MRO of key components should also be sought from the OEMs. These OEMs also need to come forward to establish their authorised repair centres in India in collaboration with existing local-MRO players so that facilities can be established at a faster pace.

Thus, airlines need place its terms before the OEMs with regards to MRO capabilities, training as well as technology transfer to make India self-reliant in terms of developing an overall MRO ecosystem in the country.

THE FUTURE

Looking at the above new MRO facilities, new capabilities being developed by the airline as well as independent MROs in the country and the way forward to overcome the obstacles and bottlenecks Indian MRO is on a path towards self-reliance and progress. Looking at the above, on an optimistic note, Mumbai-based analytics group CRISIL Ratings have forecasted that India’s annual MRO revenue could grow more than threefold to $55-60 billion by 2050 from roughly $18 billion by fiscal 2028. The Ministry of Civil Aviation is confident that changes in the policy structure and providing unconditional support to MRO players in the country will significantly enhance the competitiveness of the Indian MRO sector, fostering innovation and efficiency, and creating a robust and efficient aviation sector.