Aviation Minister Shri Kinjrapu Rammohan Naidu has announced the implementation of a uniform IGST rate of 5% on all aircraft and aircraft engine parts. This will be effective from today,15th July 2024. This decision represents a major milestone for the domestic Maintenance, Repair, and Overhaul (MRO) industry. It intends to establish India as a global aviation hub.

Commenting on this development, Shri Naidu said, “The introduction of a uniform 5% IGST rate on MRO items is a major boost for the aviation sector.” Previously, the varied GST rates of 5%, 12%, 18%, and 28% on aircraft components created challenges. The varied taxes include an inverted duty structure and GST accumulation in MRO accounts. This new policy removes inequalities, simplifies the tax system, and promotes growth in the MRO industry.

The Union Minister emphasized Prime Minister Shri Narendra Modi’s visionary leadership in making the Atma Nirbhar Bharat initiative possible. PM’s support has been crucial in driving forward the policy to transform India into a leading aviation hub.

The Union Minister praised the Ministry of Civil Aviation, Ministry of Finance, and other stakeholders for their diligent work. This helped in achieving the policy change recommended by the GST Council during its 53rd meeting on June 22, 2024. The new uniform 5% IGST rate is designed to lower operational costs, address tax credit issues, and attract investment.

Target for the Aviation Industry

Shri Rammohan Naidu highlighted the prospects, saying, “Our vision is to turn India into a leading aviation hub.” Moreover, the Indian MRO industry is projected to reach a value of $4 billion by the year 2030. Furthermore, this policy change is a crucial step toward establishing a robust MRO services ecosystem, fostering innovation, and ensuring sustainable growth.

The ministry is confident that this action will greatly improve the competitiveness of the Indian MRO sector. It will also encourage innovation and efficiency, and establish a strong and effective aviation industry.

What is Aviation Meaning

Aviation refers to the activities surrounding mechanical flight and the aircraft industry. It encompasses a wide range of aspects, including:

Aircraft: This covers all types of flying machines, from fixed-wing aeroplanes and helicopters to lighter-than-air vehicles like hot air balloons and airships.

Flight Operations: This involves the entire process of operating an aircraft, from pre-flight checks and air traffic control to take-off, landing, and navigation.

Airports and Air Traffic Control: Airports provide the infrastructure for take-off, landing, and maintenance of aircraft, while Air Traffic Control ensures the safe and orderly flow of air traffic.

Manufacturing and Design: The aviation industry involves a complex network of companies that design, develop, manufacture, and maintain aircraft, aircraft engines, and other technologies.

Regulation and Safety: Government agencies and international organizations set and enforce safety regulations to ensure the safe operation of aircraft.

General: This refers to all non-commercial flying activities, such as private flying, recreational flying, airshows, and flight training.

Aviation has revolutionized transportation, making it possible to travel long distances quickly and efficiently. It has also played a significant role in global trade, military operations, and scientific research.

Proposal to replace DGCA with CAA

Currently, the Directorate General of Civil Aviation (DGCA) is the Indian government’s regulatory body for civil aviation. Here’s a summary of its functions:

• Ensures Safety: The primary focus of the Directorate General of Civil Aviation is safety. Moreover, it enforces regulations, maintains airworthiness standards for aircraft, and investigates accidents and incidents.
• Issues Licenses: Pilots, aircraft maintenance engineers, air traffic controllers and flight engineers all require licenses issued by the DGCA.
• Regulation of Air Transport: The DGCA regulates air transport services within, to and from India. Furthermore, this includes economic regulations and setting airfare standards.
• Coordinates with ICAO: The Directorate General of Civil Aviation works alongside the International Civil Aviation Organization (ICAO) to ensure compliance with international safety standards.

The DGCA is headquartered in New Delhi and you can find more information on their official website. There’s also a proposal to replace the DGCA with a new Civil Aviation Authority (CAA) but currently, the DGCA remains the active regulatory body.