Synopsis
India's aircraft MRO industry is set to achieve a revenue of over Rs 4,500 crore in FY26, driven by fleet expansion and GST adjustments. This growth represents a striking 50% increase from FY24, improving profitability and credit profiles, as reported by Crisil Ratings.Key Takeaways
- 50% revenue growth expected by FY26.
- Projected revenue to exceed Rs 4,500 crore.
- Fleet size anticipated to grow by 20-25%.
- Reduction in GST to 5% on aircraft components.
- Improved working capital cycle by 20-25 days.
New Delhi, Jan 27 (NationPress) With the growth of fleet size and adjustments in GST, India's domestic aircraft maintenance, repair, and overhaul (MRO) sector is projected to exceed Rs 4,500 crore in the fiscal year 2026 (FY26), marking a remarkable 50 percent increase compared to fiscal 2024, according to a report released on Monday.
This surge in revenue will enhance profitability margins, and coupled with stable debt levels, is expected to improve debt protection metrics and bolster credit profiles, as indicated by a Crisil Ratings report.
The growth will be driven by a new demand for maintenance services arising from the anticipated 20-25 percent growth in operating fleet size of Indian aircraft carriers by the next year.
Additional factors include the introduction of new aircraft and the return to service of previously grounded aircraft due to engine-related issues.
“The correlation between line and airframe checks with the size of the aircraft fleet is strong, and redelivery checks are projected to see a dramatic increase next fiscal (up to 10 times the levels of fiscal 2024),” stated Shounak Chakravarty, Director at Crisil Ratings.
This growth will also be supported by a decrease in GST input tax to 5 percent for all aircraft components, which is expected to reduce component-related costs and place Indian MROs on an equal footing with their Asian counterparts.
“Their inherent cost advantages will further assist Indian MROs in capturing a larger market share,” Chakravarty added.
Moreover, the reduction in Goods and Services Tax (GST) on aircraft components and services not only enhances the competitiveness of domestic MROs against international rivals but also alleviates their working capital constraints.
With improving profitability, MRO companies are anticipated to enjoy a stronger credit profile in the medium term, as per the Crisil report.
In addition to favorable demand conditions, Indian MROs are expanding their service offerings, which is projected to boost their market penetration to 20 percent by the next fiscal year.
The potential share could have been greater if not for the time required to enhance hangar capacities, develop a local ecosystem for aviation spare parts, and provide extensive training and upskilling of personnel, which will yield benefits only in the medium term, the report noted.
Pallavi Singh, Associate Director at Crisil Ratings, mentioned that the working capital cycle is expected to improve by 20-25 days, allowing overall debt levels to remain stable while MRO players invest in broadening their service capabilities.
