Bolstered by new technologies, global alliances, and a self-reliance push, India’s aerospace and defence sector is fast building strength to secure a larger role worldwide.
India’s aerospace and defence (A&D) sector is steadily positioning itself as a significant player in the global market. Valued at US$26.78 billion in 2023, the industry is projected to reach US$48.41 billion by 2032, fuelled by technological advances, greater private sector involvement, and supportive government policies. At the same time, the country is working to strengthen indigenous capabilities while emerging as a reliable partner for international aerospace and defence companies.
A solid base
A research institution, 41 ordnance factories, nine defence public sector undertakings (DPSUs), along with more than 100 private companies, are among the primary contributors to India’s A&D ecosystem. These organisations work together to offer a full industrial base. In an attempt to help reduce the nation’s reliance on imports, the government’s ‘Make in India’ campaign has supported indigenous manufacturing. India is promoting the development of domestic solutions to meet its A&D requirements, with a focus on self-reliance.
International quality standards and modern technology have been continuously incorporated into the operations of Indian manufacturers. Through the use of precision engineering and innovative production procedures, businesses have grown their capacities. Due to these advancements, Indian companies are now able to compete on a global scale by producing components that meet the requirements for critical A&D applications.
Furthermore, strengthening the nation’s industrial capacities has been significantly supported by the rolling out of Industry 4.0 technology, like automation and data analytics. India’s position in the global market is being reinforced as it moves from being a low-cost producer to providing high-value, high-precision products.
Policy support and government initiatives
The Indian government has taken several actions. India is expected to spend US$74.7 billion on defence in 2024, placing it among the world’s largest spenders. Indigenisation has been a major priority, with rules such as the defence purchase procedure (DPP) prioritising local manufacturers in procurement. This aligns with the government’s overall goal of promoting domestic companies and reducing the country’s reliance on foreign suppliers.
Two defence industrial corridors have also been created in Uttar Pradesh and Tamil Nadu. By using highly qualified workers and current facilities, these corridors aim to increase manufacturing capacity. With an investment of ₹4 billion, the government has also put in place the Defence Testing Infrastructure Scheme (DTIS), which hopes to build superior testing facilities jointly with private sector companies.
Increased global collaboration
Companies are increasingly looking for partnerships. Collins Aerospace, for instance, expressed confidence in India’s engineering and production capabilities in December 2022 by establishing its Global Engineering and Technology Centre and India Operations Centre in Bengaluru.
Foreign direct investment (FDI) regulations have been liberalised to allow up to 74% FDI through the automatic route and 100% through government approval in defence, which additionally promotes this growing interest. By facilitating knowledge transfers and joint ventures, these relaxed regulations promote international collaborations and enhance India’s position in the global A&D market.
Building indigenous capabilities
By end-2025, the Indian government targets ₹1.75 trillion in manufacturing revenue, including ₹350 billion from exports; a major milestone for the aerospace and defence (A&D) sector. To support this, the Ministry of Defence has raised the Technology Development Fund (TDF) budget from ₹100 million to ₹500 million per project, encouraging innovation by startups and micro, small, and medium-sized enterprises (MSMEs).
The Defence Research and Development Organisation (DRDO) has been central to indigenisation, with its TDF initiative involving over 5000 companies and delivering 163 indigenous technologies. A notable success was the Power Takeoff (PTO) shaft flight test on the Light Combat Aircraft (LCA) Tejas, underscoring India’s growing ability to replace foreign-dependent technologies with homegrown solutions.
Technological advancements and their impact
To increase productivity and satisfy strict defence criteria, the sector is implementing the latest innovations like artificial intelligence (AI), data analytics, and modern manufacturing processes. Technology transfer has been made feasible by partnerships with international original equipment manufacturers (OEMs), which contributed to improved local knowledge and reduced dependency on imports.
Additionally, technology transfer from foreign OEMs to Indian companies has been facilitated by the integration of local capabilities. India’s dependence on foreign suppliers has decreased, and its technological innovations have advanced as a result of this partnership. These regional players contribute to the nation’s increased independence in the A&D sector as they gain experience in developing high-tech solutions.
Economic contributions and job Creation
By creating employment in engineering, skilled labour, and research, this sector contributes to the country’s economy. Local manufacturing has broadened, and job prospects have risen due to the defence corridors in Tamil Nadu and Uttar Pradesh. Furthermore, global alliances have improved workforce knowledge and capabilities.
Future outlook
The Indian government’s ongoing backing for the defence industry is apparent in the 2024–25 Interim Union Budget. Furthermore, the government’s aim to establish a business-friendly climate has been shown by the granting of 606 industrial licenses to 369 defence industry enterprises. By 2028-29, India aims to export defence products valued at US$6.02 billion, positioning itself as a dependable source of superior defence equipment. These export targets are probably going to help the nation’s economy prosper and improve its standing overseas.
By: Sanjeev Kumar
The author is the co-founder and CEO of Logic Fruit Technologies Pvt Ltd
