Major global aerospace corporations are intensifying their calls for India to introduce a production-linked incentive scheme specifically for aerospace components, warning that the country risks losing significant manufacturing opportunities without immediate policy action.
International Competition Heats Up
With countries including Morocco, Turkey and Japan implementing aggressive incentive programs, industry executives emphasize that India must act swiftly to maintain its competitive edge in the global aerospace manufacturing landscape. The absence of such support could cause the nation to miss crucial shifts in manufacturing dynamics.
The push for incentives spans across original equipment manufacturers ranging from engine producers like RTX's Pratt & Whitney to airframe leaders such as Airbus and Boeing, alongside numerous domestic players. These companies are advocating for a scheme modeled after the successful PLI program for drones that concluded in FY24.
Transformative Potential of Aerospace PLI
According to industry leaders, implementing a targeted incentive scheme could prompt foreign OEMs to significantly expand their sourcing from India, deepen investments, and transfer higher-value production operations to the country. The most ambitious expectation involves some major players establishing final assembly lines within India.
Ashish Saraf, Vice President & Country Head for India at Pratt & Whitney, highlighted the transformative impact such measures could have. "The government's PLI scheme for drones fast-tracked local capability. A similar sector-specific PLI for aerospace and defence could have a transformative impact, especially given the sector's capital-intensive nature and complex supply chains," he stated.
For context, India's previous drone PLI program allocated ₹120 crore in incentives over a three-year period from FY22 to FY24, rewarding companies based on the value they added within India. Approximately ₹98 crore was disbursed under this initiative, with firms receiving 20% of their value addition as incentives.
Market Size and Current Capabilities
India's aerospace parts manufacturing sector shows substantial growth potential, with market size projected to reach $21.48 billion by 2030, according to a June 2024 report from Grand View Research. This represents a compound annual growth rate of 6.8% from 2024 to 2030.
Current export performance remains strong, with India's aircraft and spacecraft parts and products exports reaching $6.9 billion in FY25, as reported by the Engineering Export Promotion Council of India.
The country already hosts several established aerospace component manufacturing facilities operated by companies including:
- Hindustan Aeronautics
- Tata Advanced Systems
- Aequs
- Mahindra Aerospace
Despite this existing infrastructure, the civil aviation ministry has not yet formulated plans for a PLI scheme specific to the aerospace sector.
Investment Landscape and Infrastructure Development
Foreign OEMs have demonstrated substantial commitment to India through large-scale investments over the past two decades. Companies like RTX have contributed significantly to enhancing the global competitiveness of Indian supply chains.
In a notable development, French aerospace leader Safran is establishing its first engine maintenance, repair and overhaul facility in Hyderabad. This LEAP engine MRO represents a $150 million investment and is expected to dramatically reduce turnaround times for Indian airlines, improving fleet availability and operational efficiency. Indian carriers have currently placed orders for approximately 1,500 Safran engines to power their aircraft.
Industry Perspectives and Recommendations
Salil Gupte, President of Boeing India & South Asia, advocates for a PLI focused on specific components including aerostructures, cabin interiors, and landing-gear parts. He believes such measures could elevate India from a niche engineering participant to a global manufacturing hub.
"A PLI can unlock India's manufacturing potential and strengthen the aerospace supplier ecosystem," Gupte emphasized. He identified a critical challenge facing Indian suppliers: limited access to aerospace-grade titanium and aluminum, materials that continue to be imported in significant quantities.
The industry is pushing for an extended incentive horizon of 10 years rather than the typical 3-5 year framework. Additional recommendations include comprehensive value-chain coverage beyond a narrow list of components, eligibility for foreign OEMs, joint ventures and wholly owned subsidiaries, support for in-country MRO operations, and localization milestones tied to incentive payouts.
Global Benchmarking and Competitive Landscape
Boeing's Gupte drew comparisons with competing nations that have successfully built export-driven aerospace clusters through coordinated government support, skilling programs, and export assistance.
Morocco has emerged as a formidable competitor, hosting approximately 150 aerospace firms engaged in manufacturing fuselages, wiring, structural components, and even engine assembly. The country's aerospace component exports reached $2.9 billion in 2024 according to official data.
Japan is also strengthening its aerospace position, with its aerospace and defence market valued at approximately $55 billion according to an August 2025 Ken Research report. This growth is primarily fueled by increased defence budgets and rapid technological advancements.
Turkey offers substantial incentives for high-tech aerospace investments, providing tax breaks, VAT refunds, land allocation, and skilled labor support for large projects exceeding 2 billion Turkish lira. The country additionally provides significant tax deductions and reduced social security costs for R&D and design centers.
The global leaders in aerospace component manufacturing remain the United States, France, Germany, China and the United Kingdom, setting the benchmark for India's aspirations in this high-value sector.
