Good morning. Airlines in India have been expanding their fleet of aircraft rapidly to meet growing demand in the aviation industry in the country. But the aviation maintenance, repair and overhaul (MRO) industry in the country has not been able to keep up. What is hindering its growth? Read on to know more. 

In other news, there’s a fresh round of layoffs at computer giant Dell. Meanwhile, Elon Musk’s Tesla recalls electric vehicles (EVs) in China over trunk lids problems.

DE [CODE] THE NEWS

India’s Aircraft Repair Industry Needs To Catch Up

During the recently held Union Budget 2024-2025, finance minister Nirmala Sitharaman made announcements to promote the maintenance, repair, and overhaul (MRO) sector in India for aviation and shipping. Indian airlines, with about 750 aircraft currently in service, are projected to increase their fleets fivefold by 2026.

However, most Indian carriers still send their aircraft abroad for major maintenance due to a lack of competitiveness in domestic MRO facilities. One reason is that many of these aircraft are leased. 

"Uber, for example, is the world’s largest taxi operator but doesn’t own any taxis. Similarly, IndiGo is the world’s largest airline by market capitalisation and doesn’t own a single aircraft. So why should someone who doesn’t own an aircraft end up owning an MRO?" Mark Martin, founder and CEO of aviation consultancy Martin Consulting told The Core.

The ambitious fleet expansion plans of Indian carriers, including Air India's order for 470 new aircraft, IndiGo's order for 500 A320s, and Akasa Air's acquisition of 150 B737-8s highlight the growing demand for MRO services.

Despite this, the MRO sector faces challenges such as securing investments, inadequate infrastructure, high taxes, licensing issues, and steep rental costs. 

PODCAST

Indian Markets Track Global Recovery

On Episode 358 of The Core Report, financial journalist Govindraj Ethiraj talks to Gaurang Shah, Head of Investment Strategist at Geojit Financial Services as well as Uday Ved, partner – tax services at KNAV.

• Indian markets track global recovery, poised to gain further

• The rupee falls again, closes in on Rs 84 and the RBI steps in

• Where are the Indian stock markets right now and how investors are still pouring in

• The Government relents on taxes on sale of property, other fine print that matters

• Sales of hybrids/EVs overtake all vehicle sales in China for the first time

CORE NUMBER

1.68 mn

This is the number of EVs Tesla has recalled in China because of an issue with trunk lids. The company has said in its notice while recalling the Model S and Model X vehicles that an open lid could interfere with the drivers vision during driving. Associated Press reported that this was a remote software issue and that Tesla had promised to make these repairs free of cost. China is Tesla’s biggest market outside of the US.

FROM THE PERIPHERY

—🏦 In recent months, India’s central bank, the Reserve Bank of India (RBI) has tightened compliance rules for fintech companies. On Wednesday financial services secretary Vivek Joshi said that it would benefit fintech companies to collaborate more closely with banks to design regulatory compliant solutions. Joshi said that fintechs must work with banks, rather than finding solutions on their own. “It is essential to strike a balance between fintech innovation and timely regulatory response,” Joshi said. India’s NBFC and fintech sector has grown at a rapid pace and has been plagued by several governance and regulatory compliance issues. The biggest example of a fallout of regulatory failure has been the Paytm’s payment bank which had to shut down earlier this year. 

—💼 A fresh round of layoffs at Dell, the computer giant, has put 12,500 employees of the company out of jobs. The layoffs were notified in an internal memo on August 6, and a subsequent statement by the company said that the aim was to "reorganise its business for the AI era, become leaner, and focus on growth”. The company had fired 13,000 employees last year too in two rounds of cuts. In the first half of this year alone, 337 tech companies have already let go of over 98,000 employees, according to data from Layoffs.fyi shows. 

—💸 Money for jobs? Chinese students are finding themselves shelling out up to $50,000 for jobs in finance as the job market turns gloomy. Consulting firms are offering to fast track jobs in investment banks, private equity funds and huge funds and charging hefty fees from candidates. The youth unemployment rate in China has soared to 13%, and in the finance sector specifically, job hunters grew by 30% since last year but job availability shrank by 30%. 

—🚫 Starting October 1, unregistered packing machinery for gutka and pan masala will attract a penalty of Rs 1 lakh under the goods and services tax (GST) regime. The Central Board of Indirect Taxes and Customs notified that manufacturers of pan masala and other tobacco products must register their packing machinery with GST authorities. Additionally, by April 1, 2025, entities with multiple registrations must secure mandatory Input Service Distributor registration, with penalties for non-compliance. Unregistered machines will also be seized and confiscated. This move, the authorities have said, was to improve compliance by tobacco product manufacturers. 

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