INDIA'S run up to being a Global Manufacturing Hub in Civ-Mil Aviation & Defence

Over the past five years, the Government of India has taken significant policy measures to boost Make in India, Civil Aviation, and the MRO (Maintenance, Repair, and Overhaul) sector, aiming to position India as a global manufacturing hub and a leading player in the aviation and defence industries. The Budget 2025 builds upon these initiatives, reinforcing self-reliance, strengthening infrastructure, and attracting foreign investments.

Make in India: Strengthening Domestic Manufacturing

The Make in India initiative, launched in 2014, has undergone key policy upgrades over the last five years to enhance domestic manufacturing and reduce import dependency.

Key Policy Initiatives (2019-2024):

- Production-Linked Incentive (PLI) Schemes for manufacturing sectors, including electronics, automobiles, and defence.

- Foreign Direct Investment (FDI) liberalization, allowing up to 74%(from earlier 49%) automatic route FDI in defence and up to 100 % through government route.

- Strengthening the Defence Industrial Corridors in Uttar Pradesh & Tamil Nadu.

- Introduction of Atma Nirbhar Bharat Abhiyan, encouraging self-reliance in critical sectors.

Impact of Budget 2025 on ‘Make in India’

- Higher budget allocation for indigenous defence production(9.5% increase from last year), boosting private sector participation. - Incentives for local manufacturing of aviation and defence equipment. - Policy push for drones and aerospace technology, strengthening India’s industrial ecosystem.

Civil Aviation: Expanding Infrastructure & Air Connectivity

India’s civil aviation industry has been one of the fastest-growing globally, with strong government interventions to enhance connectivity and operational efficiency.

Key Policy Initiatives (2019-2024):

- UDAN (Ude Desh Ka Aam Nagrik) Scheme to improve air connectivity to smaller towns and cities.

- Expansion of airport infrastructure, adding new airports under NABH Nirman initiative.

- Boost to aircraft leasing in India to reduce airline costs.

- Introduction of liberalized drone policies to promote commercial drone usage.

Impact of Budget 2025 on Civil Aviation

- More funding for UDAN, expanding regional air connectivity.

- Investment in new airport projects, targeting Tier-2 and Tier-3 cities.

- Tax incentives for aircraft leasing & financing, attracting global aviation businesses to India.

MRO Sector: Making India a Global Aviation Hub

The MRO industry is crucial for India’s aviation self-reliance, yet high taxation and operational costs have pushed airlines to conduct maintenance abroad. In recent years, the government has aimed to bring MRO businesses back to India.

Key Policy Initiatives (2019-2024):

- Reduction in GST on MRO services from 18% to 5%, making Indian facilities competitive.

- Development of MRO hubs near major airports.

- Allowing 100% FDI in MRO under automatic routes.

- Partnerships with global MRO companies to bring advanced technologies to India.

Impact of Budget 2025 on MRO Sector

- Further reduction in import duties on MRO components, making domestic repairs cheaper.

- Incentives for private sector investments in defence and commercial MRO.

- Strengthening of MRO clusters at major airports, enhancing India’s competitiveness.

Over the years, the Indian government has made strategic interventions in Make in India, Civil Aviation, and MRO to reduce dependency on imports and create a self-sustaining ecosystem. As the initiatives mature and Indian Aerospace & Defence Sectors gather momentum, its time now that results will start showing....