Aerospace and defense market in India 2022
The Aerospace and Defense market offers an appealing and significant opportunity for both, Indian and foreign, companies throughout the supply chain. The ordnance factories and defense public sector undertakings (DPSUs) have been continuously modernizing, upgrading, and expanding their product range with the goal of achieving self-sufficiency in defense production. The aerospace industry in India is expanding rapidly, owing to increased activity in both, the defense and civil aviation, sectors.
The Ministry of Defence (MoD) develops defense and security policies and oversees their implementation by the armed forces (that is, the Army, the Navy, and the Air Force). The MoD invested INR 4856.81 Bn for defense spending in FY 2021, up from INR 3551.50 Bn in FY 2017, an expansion at a compound annual growth rate (CAGR) of 8.14%. This includes expenditures for armed forces and civilian salaries, pensions, armed forces’ modernization, production establishments, maintenance, and its research and development organizations
Impact of COVID-19:
During the first and second wave of COVID-19, the Indian military aerospace and defense (A&D) industry witnessed a slew of policy decisions being made and implemented. The government raised the automatic route limit for foreign investment in the sector and imposed a ban on the import of certain defense items. Companies in commercial aviation were experiencing production disruption and decelerating demand as employees return home, passengers stop travelling, and people halted their travel plans.
The robust pipeline of new aircraft models and ramp-up of old model production put financial and operational strain on the existing supply chain. Private sector companies showed interest in aerospace as a result of simplified offset norms, changes in defense procurement procedures (DPP), and easing of FDI restrictions. To move up the value chain, the government and private sector collaborated to make strategic investments in technologies such as advanced materials, stealth technologies, avionics, sensors, and cybersecurity.
Key deterrents to the growth of the market:
India has been unable to attract significant private sector investments in the defense manufacturing industry. Boeing, Airbus, and Lockheed Martin, the powerhouses of A&D industry are responsible for most of the businesses or contracts awarded to A&D OEMs, resulting in fierce competition and industry rivalry.
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