In India, the aerospace and defense industries are showing significant growth. With rising activities from both the defense and civil aviation sector in aerospace and a rapidly changing global political-strategic environment with increased security challenges, the focus on the defense sector has significantly increased. The total budget allocation for the Indian military has grown in the financial year 2020-2021 to US$ 66.9 billion from US$ 65.86 billion, according to the ministry of finance.

The government Scheme UDAN for regional connectivity has positively affected demand for large aircraft from Indian carriers such as SpiceJet and Indigo. Thus, many of India's aerospace services and manufacturing activities are expected to grow faster. The annual growth of government expenditure on defense capital is creating many opportunities in defense aerospace. The Indian aerospace & defense (A&D) market is projected to reach US$ 70 billion by 2030 (as per IBEF), driven by the burgeoning demand for advanced infrastructure and government thrust.

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Key drivers contributing to the Indian aerospace and defense industry

Passenger Traffic – Domestic air travel demand continued an upward trend in October 2020, with a 33% increase (over September) to 52 lakh passengers. Further, under the Vande Bharat Mission (May 7, 2020, and October 31, 2020, international passenger traffic (inbound and outbound) stood at 10.96 lakh. (as per IBEF)
Strong Aerospace and defense Ecosystem- India ranked 19th among the world's defense exporters in attracting foreign investments. India's defense exports increased 700% in two years—from US$ 204.13 million in 2016-17 to US$ 1.44 billion in 2018-19. (as per IBEF)
In August 2020, the Union Ministry of Defense formulated the Defense Production and Export Promotion Policy to boost the country's defense production capabilities for self-reliance and exports. The policy aims to generate revenue worth US$ 23.49 billion, including exports of US$ 4.70 billion, in the aerospace & defense products and services space by 2025. (as per IBEF- ministry of commerce and industry)
Research and Development – In April 2018, an innovation platform called Innovations for Defense Excellence (iDEX) was launched. IDEX aims to build an ecosystem by encouraging defense & aerospace innovation and technology initiatives. It engages and supports industries such as start-ups, MSMEs, innovators, and institutes with grants/funding to conduct R&D for future adoption of the Indian defense and aerospace needs.
'Make in India' initiatives – Defense and aerospace continue to be a strong pillar for government systems such as Make in India to succeed. Government policies are focused on implementing advanced technologies in the defense sector, thus improving the potential of domestic manufacturing. The Defense Ministry has set a target of 70% self-reliance in weaponry by 2027, creating huge prospects for players in the industry. (as per IBEF). In line with this, the Government of India is also supporting start-ups and promoting active participation in the industry. Describing MSMEs as 'rising stars' in aerospace and defense, the Defense Ministry estimates that their numbers would double to 16,000 by 2026 as they were integrated into global supply chains. For instance, in September 2020, Dynamatic Technologies Ltd., an aerospace company based in Bengaluru, announced a contract for constructing parts for the T-7A Red Hawk trainer, one of the largest and most advanced aircraft programmers' built by Boeing and Saab in the world.


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