Union Finance Minister Nirmala Sitharaman proposed exempting basic customs duty on raw materials imported for manufacturing aircraft parts used in defence sector maintenance, repair, and overhaul (MRO) during her Union Budget 2026 presentation.
Strengthening Domestic Defence MRO Ecosystem
The exemption covers specialized alloys, composites, and components essential for fighter jets, helicopters, transport aircraft, and UAVs, reducing import costs by 10-15%. This supports public and private defence units in achieving self-reliance targets while maintaining operational readiness of critical assets.
Cost Reduction and Indigenous Manufacturing
Duty waivers accelerate MRO infrastructure development, positioning India as a regional aviation maintenance hub. The measure complements the ₹12.2 lakh crore capex push and infrastructure risk guarantee fund, enabling faster turnaround times and extending asset lifespans through cost-effective local repairs.
Strategic Defence Industrial Growth
Aligned with Atmanirbhar Bharat in defence, the reform attracts OEM partnerships, creates high-skill jobs, and builds export capabilities in aviation services. It fortifies supply chain resilience amid global tensions while supporting private sector participation in strategic manufacturing.
