Context: India’s aerospace sector is witnessing rapid expansion due to rising air travel demand, defence modernisation, and global supply-chain diversification. However, despite record growth and strategic opportunities, a serious engineering skills gap may slow India’s ambition to emerge as a major aerospace manufacturing hub.
India’s Aerospace Manufacturing Landscape
India is currently the world’s third-largest aviation market, and its domestic demand is projected to require nearly 3,300 new aircraft by 2044. This expanding fleet requirement creates a long-term opportunity for aircraft manufacturing, component production, and aviation services.
The market for aerospace parts manufacturing in India is expected to reach $21.5 billion by 2030, supported by increasing localisation and global OEM interest.
Another high-potential segment is the Maintenance, Repair and Overhaul (MRO) industry. India’s MRO sector is projected to become a $4 billion industry by 2031, gradually shifting away from dependence on foreign servicing hubs and moving towards becoming a domestic aviation service centre.
A major milestone in private manufacturing is the Tata–Airbus Final Assembly Line (FAL) established in Vadodara, Gujarat. It is India’s first private aircraft assembly line and will manufacture 40 C-295 transport aircraft, strengthening indigenous defence aviation capacity.
Government Initiatives Supporting Aerospace Manufacturing
India has adopted several policy measures to strengthen aerospace production and attract investment:
- Positive Indigenisation Lists: The Ministry of Defence issued five lists covering 5,000+ items, banning imports and creating assured demand for domestic firms.
- Defence Industrial Corridors: Dedicated corridors in Uttar Pradesh and Tamil Nadu provide subsidised land and plug-and-play infrastructure for aviation and defence industries.
- Boost to MRO Competitiveness: The GST rate on MRO services was reduced from 18% to 5%, along with place-of-supply reforms, making Indian MRO hubs more attractive globally.
- FDI Liberalisation: Up to 74% FDI is permitted under the automatic route in defence manufacturing, encouraging global OEMs to establish production units in India.
- SRIJAN Portal: Enables firms to identify defence and aviation items earlier imported by PSUs, supporting reverse engineering and local production.
- Procurement Reforms: The Defence Acquisition Procedure (DAP) and procurement orders increasingly mandate domestic content requirements.
Key Challenge: Engineering Skills Gap
Despite policy push, India faces shortages in specialised aerospace talent such as:
- avionics engineers
- precision manufacturing specialists
- composites and materials experts
- quality assurance and certification professionals
Without addressing this gap through targeted training and industry-academia integration, India may struggle to compete with established global aerospace ecosystems.
Conclusion
India has the market demand, policy support, and strategic advantage to become a global aerospace manufacturing hub. However, success will depend on building a skilled workforce, expanding certification capacity, and integrating deeper into global aerospace supply chains.