New Delhi: Riding on expanding fleet size and GST rationalisation, India’s domestic aircraft maintenance, repair and overhaul (MRO) industry is likely to see its revenue surpass Rs 4,500 crore in fiscal 2026 (FY26), clocking an impressive 50 per cent growth over fiscal 2024, a report said on Monday.
The increase in scale will enhance profitability margins which along with range-bound debt levels should improve debt protection metrics and strengthen credit profiles, according to a Crisil Ratings report.
This growth will be fuelled by fresh demand for maintenance services emanating from rising operating fleet size of Indian aircraft carriers — expected to grow by up to 20-25 per cent by next year. This will be aided by new aircrafts getting added and grounded aircrafts (post engine-related issues) resuming operations.
“While line and airframe checks are strongly correlated with aircraft fleet size, redelivery checks are likely to grow multi-fold next fiscal (up to 10 times over fiscal 2024 levels),” said Shounak Chakravarty, Director, Crisil Ratings.
This will be driven by the reduction in GST input tax, to 5 per cent on all aircraft components, which may lower the component-related expenditure and place Indian MROs on par with their Asian competitors.
“Their intrinsic cost advantages will further help Indian MROs gain market share,” said Chakravarty. Additionally, reduction in Goods and Services Tax (GST) on aircraft components and services not only positions domestic MROs more competitively with their overseas competitors but also ease their working capital blockage.
This, along with players’ improving profitability, will have MRO players savouring improved credit profile over the medium term, said the Crisil report. In addition to demand tail winds, Indian MROs are also adding to their service repertoire which will improve their penetration to up to 20 per cent by next fiscal.
The share could have been higher but for the time needed to ramp up hangar capacities, local ecosystem for aviation spare parts and extensive training/upskilling of manpower that will yield results only over the medium term, said the report.
Pallavi Singh, Associate Director, Crisil Ratings, said that the working capital cycle to expected to improve by 20-25 days and hence, overall debt levels will remain range bound even as MRO players invest in expanding their service offerings.