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India already has a sizable market for both defense and commercial aircraft. The demand for airplanes is predicted to rise further due to expanding passenger traffic and rising military and defense spending. One of the industries with the quickest rate of growth is the aerospace sector in India. By 2020, India’s aerospace sector is predicted to rank third in the world.

Over the past three years, the present administration has implemented important policy changes. The government’s intention to change the status quo is demonstrated by the new Defence Procurement Procedure (DPP 2016) and National Civil Aviation Policy (NCAP 2016), which is encouraging.

The Indian aerospace industry’s manufacture is expanding due to a number of factors. These include both macro and micro factors: a robust domestic

manufacturing base, cost advantages, a well-educated talent pool, the ability to leverage IT competitiveness, a liberal Special Economic Zones law that offers developers and manufacturers enticing fiscal benefits, the liberalization of civil aviation policies, offset requirements, and strong economic growth that has led to a rapidly growing domestic aircraft demand.

India has undoubtedly developed into a significant aerospace hub, regardless of the nation’s air navigation regulations. The expansion of India’s aerospace sector shows that the nation is quickly developing the skills necessary to become a top location for supporting the global A&D supply chain. In addition to overhauling and maintaining aero engines, many domestic and international players are working together and forming joint ventures for the production of aero components and Maintenance, Repair, and Overhaul (MRO) facilities for the civil and military aviation sectors as a result of the government opening up and offering the private sector enormous opportunities. By 2021, the MRO market in India is predicted to expand by 10% to reach USD 2.6 billion.

From 2016 to 2035, the global fleet of commercial aircraft is projected to expand at a CAGR of about 4%. According to Boeing’s prediction, more than 39,600 aircraft will be needed between 2016 and 2035, with almost 38% of those deliveries going to carriers in Asia. According to Airbus, there will be a need for 33,070 additional aircraft deliveries between 2016 and 2035. On average, 58% of the demand will be for additional growth, and 42% will be for replacing the current aircraft. From 2016 to 2035, single-aisle aircraft will account for over 71% of all new deliveries, dominating the global fleet. The bulk of these deliveries will take place in the Asia-Pacific area, with the Middle East, South East Asia, China, and India serving as important markets for the major international aircraft manufacturers.

The cumulative capital budget for the Indian Air Force (IAF) until the end of the 12th to 14th five-year plan (2012-2027) is projected to be approximately US $218 billion, of which 69 percent is for the acquisition of aircraft and aero engines. For the next 15 years, the IAF will spend approximately US $150 billion on aircraft and aero engines, which is expected to grow by 10-15% annually. This indicates a large pipeline of orders in the military aircraft segment, with a growing need for Indian sourcing partners. Indian defense expenditures have increased at a compound annual growth rate of 9.7% from 2008-2016 to current levels of USD 42.83 billion in 2017-18.

Over the course of the contract, foreign OEMs will have the freedom to select offset partners and replace current partners with ease, increasing competition and efficiency. Under the Buy (Global) category, offsets are applicable for contracts exceeding US$ 300 million (INR 2000 cr). Foreign OEMs currently owe about USD 5 billion in offset obligations, and another 10 to 12 billion USD in offsets are in the pipeline, which must be paid out over the next 8 to 10 years.

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