India is scoring self goals in the aviation sector and driving away business, according to industry chamber FICCI and consultancy KPMG. The industry is over-taxed, and this is clearly reflected in the industry’s lack of competitiveness at the global level, they said in a report released at the Indian Aviation 2014 air show. KPMG’s India Head of Aerospace and Defence Mr Amber Dubey said the MRO segment is a classic example of this . “Only 5-10 per cent of the MRO (maintenance, repair and overhaul) work for domestic scheduled carriers is carried out in India, while most of the maintenance activities are outsourced to third-party service providers outside the country,” he said while releasing the report. The Indian fleet of aircraft is expected to double to 1,000 by 2020, promising huge opportunity for the MRO business, but high taxes could drive away this opportunity, he said. The civil aviation industry is among the top 10 in the world with a size of about $16 billion. “This is a fraction of what it can actually achieve,” Mr Dubey said. Several tier II and tier III cities are still unconnected or underserved. “In order to tap this opportunity, we need to relax regulations, revise security requirements, allow domestic code sharing and provide free or discounted utilities,” the report felt. All this will have a multiplier effect in terms of higher growth of local economic activities, tourism and employment, Mr Dubey said. The industry requires 3.5 lakh new employees to facilitate growth over the next 10 years.
Untapped potential
According to the report, the country has the potential to become the third largest aviation market by 2020 and the largest by 2030. “There is large untapped potential for growth. The fact that access to aviation is still a dream for nearly 99.5 per cent of its population reflects the potential,” Mr Siddharth Birla, President of FICCI, said.
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