85% of aircraft maintenance outsourced abroad, Parliamentary panel warns of 'strategic vulnerability'

India’s civil aviation sector is haemorrhaging foreign exchange and compromising self-reliance by sending bulk of its aircraft maintenance overseas, a Parliamentary panel has warned, calling the practice “a national issue with significant strategic and economic vulnerabilities.”

In a report tabled on Wednesday, the Department-Related Parliamentary Standing Committee on Transport, Tourism and Culture, chaired by JD(U) MP Sanjay Kumar Jha, expressed alarm that “around 85% of MRO (Maintenance, Repair, and Overhaul) activities are done abroad in centres certified by Original Equipment Manufacturers (OEMs).”

The committee said this reliance on foreign hubs for heavy maintenance checks and major component overhauls, despite the presence of MRO companies within India, amounted to underutilisation of indigenous capacity, higher costs, longer turnaround times and a dangerous strategic dependency.

“The outsourcing of MRO services should not be viewed merely as a series of independent business decisions made by airlines based on cost. It is a national issue with significant strategic and economic vulnerabilities for India,” the report read.

While airlines frequently send aircraft to international aviation hubs for servicing, domestic MRO operators face hurdles in securing business even from Indian carriers. The panel cited “a high taxation regime on imported spare parts and components” along with complex customs processes, weak infrastructure and delays in securing international certifications as major reasons why local players remain uncompetitive.

The fallout is severe. Economically, the report warned, it results in “a substantial and continuous outflow of foreign exchange that could otherwise be retained and reinvested within the Indian economy.”

Operationally, it means “longer turnaround times for aircraft undergoing heavy maintenance, which directly affects fleet availability and an airline’s operational efficiency.”

Strategically, it creates “a critical dependency on other nations for a fundamental aspect of aviation safety and operational readiness that could be disrupted or exploited during times of geopolitical instability or supply chain shocks.”

Beyond economics and strategy, the committee said the trend was stifling an entire domestic ecosystem of jobs and advanced engineering.

“Most importantly, this trend stifles the growth of a high-skilled, technologically advanced domestic MRO ecosystem. Building a robust domestic MRO industry is therefore not just a matter of import substitution; it is a critical component of achieving national aviation self-reliance and security,” the report said.

Despite recent government measures, such as cutting GST on MRO services from 18 per cent to 5 per cent, abolishing royalties for land allotments at AAI airports, and easing customs duty on toolkits, the committee noted that the impact was limited. The fundamental problem of taxation, certification delays and lack of incentives for large-scale investment persisted.

Warning that India risks missing a golden opportunity to emerge as a regional MRO hub despite having the advantages of fleet size, geographical location and lower labour costs, the committee prescribed an urgent overhaul.

It recommended a comprehensive policy review to ensure Indian carriers meet a “substantial and growing share” of their MRO needs at home, rationalisation of taxes on imported aircraft parts, targeted fiscal and infrastructural incentives to attract investment in state-of-the-art facilities and strategic skill development initiatives for engineers and technicians.

The report also urged the government to encourage domestic allocation, with airlines expected to spend a defined portion of their MRO budgets within India and proposed a National Aviation Skill Development Mission for MRO, aligned with international certification standards such as EASA and FAA.

“India has the potential to become a global MRO hub due to its increasing fleet size, geographical location and comparatively lower labour costs,” the panel concluded, warning that without urgent reforms the country would remain dependent on foreign centres for a core aspect of aviation safety.