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France’s Safran may start aircraft repairing facility in Nagpur

LiveMint logoLiveMint 12-06-2014 Makarand Gadgil &

Mumbai: Safran SA, a maker of aircraft engines and defence electronics, may consider running a repair shop in Nagpur on tax sops offered by the Maharashtra state government.

The decision to exempt the French firm from value-added tax was announced by finance minister Ajit Pawar when he presented the budget in the state assembly last week.

“Safran executives met me at Davos last year and showed interest in coming to Maharashtra. Subsequently, they visited Nagpur and were impressed by the facilities there,” chief minister Prithviraj Chavan said on Saturday. “So we are hoping that they will decide to invest in the state.”

Safran did not respond to an email sent on 7 June.

If the multinational firm, which supplies equipment to fighter jets and helicopters of India’s defence forces, decides to set up shop in Nagpur, it will follow US-based Boeing Co. that is building a repair and maintenance facility at the city’s forthcoming airport and cargo hub.

Boeing’s facility is almost ready, Dinesh A. Keskar, vice-president, sales, Boeing Commercial Airplanes, said in a March interview.

Construction began in January 2012 at the facility, which involves a total investment of around $100 million. It was supposed to ready by November 2012.

“Some work such as the taxiway to the MRO (maintenance, repair and overhaul) need to be finished. Otherwise, it’s 95% ready. We are expecting to commission the MRO in Nagpur by the middle of this calendar year,” Keskar had said.

There’s a large untapped opportunity in India for aircraft maintenance and repair, experts say. Only 5-10% of such work for domestic scheduled airlines is carried out in the country.

Both Safran and Boeing, said chief minister Chavan, had requested the removal of a tax anomaly to facilitate the setting up of such units in Maharashtra.

“If you buy spare parts, it attracts tax. They (Safran and Boeing) appealed to us to remove this anomaly as a prerequisite to attracting MRO business in the state,” he said. “We have decided to accept their request.”

Safran is exploring the possibility of setting up a maintenance facility in India, Christophe Poulain, vice-president of commercial strategy at Safran Group, had said in March, without elaborating.

The Indian market for such services could be around $700 million, consultancy KPMG said a March report. The local aircraft fleet is likely to double by 2020, it said, creating a robust demand for repair and maintenance.

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