India's Legal Framework for Setting Up an MRO Facility: Approvals, Land, and Customs

Setting up an aircraft maintenance, repair and overhaul facility in India requires three parallel regulatory processes on different timelines: airworthiness approval from the Directorate General of Civil Aviation (DGCA), airport land and airside access from the relevant airport operator, and customs and goods and services tax treatment from the revenue authorities.

The governing statute changed on 1 January 2025, when the Aircraft Act, 1934 was repealed and replaced by the Bharatiya Vayuyan Adhiniyam, 2024. The Aircraft Rules, 1937 remain in force under the savings provision of the new Act, and the approval architecture for maintenance businesses continues to rest on Rule 133B, which requires that maintenance of India-controlled aircraft and components be performed only by a DGCA-approved organisation. That approval is administered through CAR-145, first issued on 26 January 2005 and modelled on EASA Part-145, with Issue 02 dated 8 October 2013 and a draft revision circulated for stakeholder comment in January 2024. Approval is granted against a defined scope: Class A for aircraft base and line maintenance, Class B for engines and auxiliary power units, Class C for components in defined trade groups, and Class D for specialised services such as non-destructive testing.

The DGCA assesses named individuals before buildings: an accountable manager with corporate authority to commit funds, a quality manager independent of production, and certifying staff holding aircraft maintenance engineer licences under CAR-66 with correct type ratings. The application is built around a Maintenance Organisation Exposition, audited later by the regulator, with a facility inspection following document review and the certificate issuing once the organisation demonstrates the system working. Adjacent approvals can include CAR-M for continuing airworthiness management, CAR-147 for training and examination of engineers, and CAR-21 for parts manufacture or design changes, with parallel EASA or FAA certification required where the target market includes foreign-registered aircraft.

Foreign direct investment of up to 100 per cent is permitted in MRO under the automatic route, with separate screening for investors from countries sharing a land border with India and reporting obligations under the Foreign Exchange Management Act, 1999. At airports operated by the Airports Authority of India, the MRO Guidelines issued on 1 September 2021 replaced allotment on request with open tender, offer land on a 30-year term (an initial 15 years with provision for a further 15), and set lease rental through competitive bidding with escalation of 15 per cent every three years; an incumbent holds a right of first refusal if its bid falls within 15 per cent of the highest bid and it agrees to match that rate. An Addendum issued on 20 February 2026 grants a moratorium and a rent-free period to operators. Basic customs duty exemption on parts, components, testing equipment, tools and tool kits imported for MRO runs to 31 March 2028. Notification No. 28/2024-Customs dated 12 July 2024 amended Notification No. 50/2017-Customs to apply a uniform integrated tax rate of 5 per cent to imports of aircraft parts, components, testing equipment, tools and tool kits regardless of classification, effective 15 July 2024, resolving an inverted duty structure that had previously stranded input tax credits. The Union Budget presented in 2026 extended basic customs duty exemption to further components and parts.

This is a case of regulatory sequencing determining commercial timelines rather than any single approval acting as the bottleneck. A CAR-145 certificate, an airport land lease and a customs classification are issued by three different bodies working to three different clocks, and a facility cannot open until all three align.

How this plays out in practice is that the personnel-first structure of CAR-145 — accountable manager, independent quality manager, licensed certifying staff — front-loads the organisational build before any inspection of physical assets occurs, while the 30-year AAI land term with three-year rent escalation sets the long-run cost base independently of when certification actually completes. The customs and tax track moves on its own legislative calendar, with the uniform 5 per cent integrated tax rate resolving a structural problem — stranded input tax credits under the prior inverted duty structure — that had nothing to do with airworthiness approval at all.

What remains open is how the 20 February 2026 Addendum's moratorium and rent-free period interact with the existing 15-year lease structure for operators already committed to bids under the older terms, and whether the 2026 Union Budget's extension of duty exemption to further components changes the calculus for facilities still in the CAR-145 application stage. Anyone assessing entry into this segment has to track the DGCA's CAR-145 revision process, the AAI's tender terms at the specific airport in question, and the customs notification schedule as three separate, independently moving inputs.