The Indian aerospace and defense market is projected to soar to USD 54.4 billion by 2033, a significant leap from its valuation of USD 27.1 billion in 2024, growing at a CAGR of 6.99% during the forecast period. This rapid growth, highlighted by Custom Market Insights, underscores the sector’s dynamic expansion fueled by increasing manufacturing demands from both domestic and international aircraft carriers. This surge necessitates advancements in innovation and technology for the design, development, and production of critical components and systems, including aircraft engines.
To meet this burgeoning demand, top industry players like Hindustan Aeronautics Limited (HAL), Tata Advanced Systems Limited (TASL), and L&T Aerospace must collaborate with smaller, technologically adept players. Here, Micro, Small, and Medium Enterprises (MSMEs) become indispensable. Known as the backbone of the Indian economy, MSMEs foster innovation, generate employment, and promote equitable development. Their agility and expertise in producing a wide range of aerospace components make them vital to the supply chain, ensuring timely delivery to manufacturers and distributors, unlike larger organizations burdened by bureaucratic processes.
Recognizing the importance of a robust supply chain, the Indian government is pushing for “Make in India,” particularly in the Aerospace and Defense (A&D) sector. Samir V. Kamat, Secretary of the Department of Defence R&D and Chairman of DRDO, emphasized the government’s aim to increase indigenous content in the defense and aerospace sector to over 70% in the next 3-4 years, highlighting the critical role of MSMEs in this endeavor. This push was echoed by Prime Minister Narendra Modi during the 2015 Aero India Air Show, reinforcing the theme of ‘Make in India’.
Government initiatives like the Defence Offset Policy encourage the development of synergistic sectors such as civil aerospace and internal security, providing special incentives for MSMEs. Regular interactions with vendors and stakeholders help address concerns, fostering a collaborative environment.
While reduced imports and record-high defense exports in A&D are promising, further improvements are needed for India to compete globally. Service or product-linked incentives could foster collaboration between large companies and MSMEs. Simplifying regulations for cross-border transactions with global supply chains and striving for self-reliance in the aerospace industry are crucial steps. Additionally, a clear Aerospace Policy, an independent nodal agency for collaboration, and increased government spending focused on small startups, MSMEs, and academia are necessary to fuel research and development for sustainable growth.
The future of the Indian aerospace sector hinges on the symbiotic relationship between big companies, MSMEs, and the government. By introducing industry-friendly schemes, addressing regulatory challenges, incentivizing partnerships, and promoting large-scale manufacturing, India can emerge as a global aerospace hub, competing with world leaders.