Indian MRO industry to grow 50% by FY26

India’s aircraft maintenance, repair, and overhaul (MRO) industry is set to grow by 50%, reaching ₹4,500 crore in FY26, driven by airline fleet expansion and policy support. The reduction in GST on aircraft components enhances competitiveness and eases working capital constraints.

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The Indian aircraft maintenance, repair, and overhaul (MRO) industry is projected to achieve a 50% topline growth, reaching ₹4,500 crore in FY26, driven by increased demand from expanding airline fleets, according to Crisil Ratings. A study based on three key MRO operators, contributing 90% of the industry’s revenue, highlights that the reduction in GST on aircraft components and services enhances the competitiveness of domestic MRO players against overseas rivals while easing their working capital constraints.

Indian MRO providers primarily offer three services—line checks (conducted before every takeoff), airframe checks (performed every 12-18 months, requiring aircraft grounding for 3-4 weeks), and redelivery checks (conducted at the end of a lease period, typically 6-7 years).

“Revenue of the domestic aircraft maintenance, repair and overhaul industry will surpass ₹4,500 crore in fiscal 2026, clocking an impressive 50 per cent growth over fiscal 2024. The increase in scale will enhance profitability margins which along with range bound debt levels should improve debt protection metrics and strengthen credit profiles,” Crisil Ratings stated.

With domestic airline fleets expected to expand by 20-25% next year, growth will be driven by new aircraft additions and the return of previously grounded aircraft following engine-related issues.

Additionally, the reduction in GST on aircraft components and services not only strengthens domestic MROs’ competitive position but also alleviates working capital blockages. Combined with improving profitability, this will enhance the credit profiles of MRO players over the medium term.

“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). 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 Shounak Chakravarty, Director, Crisil Ratings.

In FY24, only 14% of total MRO spending by Indian carriers was handled domestically. This is mainly because high-value, heavy maintenance checks, such as engine overhauls (every 20-24 months), are typically outsourced overseas due to capacity limitations and longer turnaround times in India. Beyond demand-driven growth, Indian MROs are expanding their service portfolios, which will increase their market penetration to 20% by the next fiscal year. However, a higher share is constrained by the need for additional hangar capacity, a stronger local supply chain for aviation spare parts, and workforce training, which will yield results in the medium term.

“We expect, the working capital cycle 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. Consequently, interest coverage ratio will improve to 3-3.3 times next fiscal, from 2.7 times in fiscal 2024, thus improving credit profiles,” said Pallavi Singh, Associate Director, Crisil Ratings.

As operations scale up and the high-margin redelivery segment expands, profitability is expected to reach 20% by FY26. This, along with the correction of the inverted duty structure—reducing the accumulation of input tax credit—will strengthen cash flows for MRO service providers.