An aerospace manufacturing ecosystem hub links anchor manufacturers, tiered suppliers, shared finishing facilities, maintenance and repair services, logistics-enabled economic zones, and training and research institutions into one self-reinforcing whole. Globally, Toulouse, Puget Sound, Wichita, Montreal, Hamburg, the West Midlands and Xi’an each specialise differently, from full value-chain co-location to engine expertise to state-planned scale. India is building this model through Hyderabad’s GMR Aerocity, Karnataka’s Bengaluru zone and Aequs’s private Belagavi ecosystem, and Assam’s new maintenance-led push, backed by a national design-to-maintenance vision.
Presently, nearly every aircraft in India’s civil and military fleets that needs heavy maintenance leaves the country to get it. A parliamentary standing committee found that roughly 85 per cent of India’s aircraft maintenance, repair and overhaul work is still carried out abroad, calling the pattern, in reporting by The Tribune, “a national issue with significant strategic and economic vulnerabilities.” That finding sits oddly next to the headline numbers officials cite about India’s aerospace ambitions, and the gap between the two tells a sharper story than either figure alone.
What “Hub” Status Actually Requires
That distinction sits at the centre of the Atmanirbhar Bharat push in aerospace, which asks India to build a domestic ecosystem, become a world aerospace hub, and win export competitiveness through it. Almost every metric used to track that ambition measures one thing: units built, contracts signed, turnover booked. Manufacturing capacity is necessary; it is not, on its own, sufficient. Genuine hub status also requires sustenance, a domestic order book that does not stall when one foreign source dries up; quality control certifying systems fast enough to match global timelines; maintenance – keeping a fleet flying without routinely sending it overseas; spiral growth – the design authority to upgrade a platform after delivery rather than freezing it at its original specification; and life-cycle cost control – competing on total cost of ownership, not just the price of the initial sale. A country that manufactures aircraft it cannot maintain, or builds under licence without acquiring the right to redesign what it builds, has not become self-reliant in any operational sense, whatever its production charts show.
The Record, Credited Fairly
India’s record on the first requirement is genuinely strong and deserves credit. Domestic defence production reached roughly ₹1.78 lakh crore in 2025-26, nearly quadruple the figure a decade earlier. Defence Production Secretary Sanjeev Kumar’s own presentation, as per a report, put total defence exports at close to ₹39,000 crore, up from just ₹686 crore in 2013-14, with aerospace exports specifically at roughly ₹6,300 crore. The government has set a further turnover target of ₹1,75,000 crore in aerospace and defence goods and services, and is pursuing ₹50,000 crore in defence exports by 2029. Private capital is no longer a token presence either, with Adani Defence & Aerospace investing ₹2,500 crore in South Asia’s largest private-sector missile ecosystem. None of this is manufactured optimism: it is real, and the ambition to address maintenance and design authority is present in policy. It has simply been outpaced by the ambition to build, for a plain political-economy reason, a new production line makes for a photographable ribbon-cutting, while rewriting a customs schedule or a technology-rights clause produces no such moment, even though it is what eventually decides whether the first pays off.
Blind Spot One: The Maintenance, Customs and Logistics Gap
The maintenance gap is the plainer of the blind spots, because the parliamentary committee has already measured it. Beyond the headline 85 per cent figure, the committee named three costs: a continuous outflow of foreign exchange that could otherwise strengthen domestic industry; longer turnaround times for aircraft sent abroad, which reduces fleet availability; and a strategic dependency on foreign centres for “a fundamental aspect of aviation safety” that turns dangerous when geopolitics shifts. The causes, per the same reporting, are largely self-inflicted: high taxation on imported spare parts, complex customs procedures, weak domestic infrastructure and slow certification. The duty structure compounds itself by taxing imported components as though the finished aircraft were the import, ignoring the second-order effect of pushing the maintenance business itself offshore — a gap the 2021 MRO Policy’s waiver of customs duty on tools and spares, and its cut in GST on MRO services from 18 to 5 per cent, have only partly closed, Outlook Business has reported. Ground infrastructure adds a second constraint: limited allocation of land for MRO hangars near major airports pushes operators away from the runway and raises turnaround costs, the same reporting notes — a pattern that recurs nationally, since logistics costs, including cargo handling and port turnaround, run at 13-14 per cent of GDP against roughly 8-9 per cent in China, an Equirus Securities analysis cited by The Tribune has found. India has the fleet size and geography to be a natural regional MRO hub; it has not yet rewritten the tax, customs and logistics regime standing between that potential and the outcome.
Blind Spot Two: Design Authority and Technology Transfer
The second blind spot is less visible but arguably more consequential, since it touches every platform India has ever built under licence. A 2026 study of India’s technology-transfer record, The Illusion of Technology Transfer, by Shashank Tiwari for the Council for Strategic and Defense Research, found that Hindustan Aeronautics built 222 Su-30MKI fighters under Russian licence between 2004 and 2023, one of the largest licensed-production runs of a modern combat aircraft outside its country of origin, yet India still lacks unrestricted design authority over an aircraft it has assembled for two decades. The same study found a 2019 audit of 46 defence offset contracts worth ₹66,427 crore in which the government accepted only ₹5,457 crore of the ₹19,223 crore that had fallen due, without a single documented case of a foreign vendor transferring genuinely high technology to Indian industry. India’s own Defence Production Secretary has acknowledged the problem bluntly: “no country, no company gives their latest technology to anybody else except their own forces,” a remark delivered at an industry gathering as per the report by a publication. Production volume has risen for decades without a matching rise in the right to redesign, and that gap decides whether a platform can be upgraded, adapted or sold onward under India’s own authority. The draft Defence Acquisition Procedure of 2026 marks a genuine, if belated, shift here, from “Make in India” toward “Owned by India.”
Blind Spot Three: The Cost, Labour and Coordination Gap
A harder layer of everyday constraints shapes whether any capability gets built at all. Setting up a licensed manufacturing line has meant navigating an industrial-licensing regime that, before 2019 reforms fixed a standard five-month processing rule and stretched licence validity from seven-plus-three years to fifteen-plus-three, offered no assured timeline at all, PIB’s own account of the reform shows, a licence raj that long pre-dated any shovel going into the ground. Labour productivity compounds the delay: India’s productivity gap with China has widened by more than US$30,000 per worker since 2000, and India now sits at roughly Bangladesh’s productivity level, well behind Vietnam’s post-pandemic gains, an Equirus Securities analysis cited by The Tribune has found. Labour law is part of the reason: the pre-reform Industrial Disputes Act required government permission before any factory above 100 workers could lay off staff, PRS India notes, pushing firms toward contract labour up from 26 to 36 per cent of the factory workforce between 2004-05 and 2017-18 rather than toward scale. Financial incentive is the next gap: India has no production-linked incentive for aerospace components, even as Pratt & Whitney, Boeing and Airbus lobby for one, arguing, as reported by MENAFN, that a capital-intensive sector facing Morocco’s and Turkey’s aggressive subsidies cannot scale on cost advantage alone. Aero engines are the sharpest instance: India still cannot design or series-produce a jet engine, the four-decade Kaveri programme having effectively lapsed, and no ministry has a dedicated engine policy, The Wire has reported, leaving fighter and helicopter programmes hostage to foreign suppliers’ own delivery timelines. Underlying several of these gaps is a coordination failure between the two ministries that jointly hold the keys to scale: military and civil MRO have functioned, in one industry account, as “isolated packets,” HAL’s military facilities largely closed to civil operators even as combined civil-military MRO spending was projected to approach US$50 billion by 2025 — scale that could offset cost on both sides if the Ministry of Civil Aviation and the Ministry of Defence built the joint mechanism, rather than continuing to plan apart.
The Structural Gap Beneath All Three
A further gap sits beneath all three: funding for the research that sustains spiral growth is shrinking as a share of the defence budget, Parliament’s own budget analysis shows defence R&D fell to 3.7 per cent of total defence expenditure in 2026-27, down from 4.7 per cent in 2014-15. Responsibility for closing these gaps is split across the Ministry of Defence, DRDO, the defence public-sector undertakings, state governments and private industry, with no single authority on the model of the Semiconductor Mission or ISRO accountable for the combined outcome.
What Closing the Gap Would Take
None of this argues for slowing the manufacturing push, which is working. It argues for treating maintenance capacity, design authority, cost competitiveness and engine self-reliance as first-order strategic questions rather than fine print settled contract by contract: rationalising the customs, tax and land-allocation regime around MRO and cargo logistics; restoring a fixed, short licensing timeline; introducing a production-linked incentive for aerospace components and a dedicated engine-development mission with its own budget line; passing the pending labour codes rather than leaving them in Standing Committee limbo; fast-tracking mutual recognition of international airworthiness certification; and building the joint Ministry of Civil Aviation–Ministry of Defence mechanism needed to plan military and civil aerospace scale together.
A genuine aerospace hub is not measured only by how many aircraft roll off a production line. It is measured by whether the buyer can keep those aircraft flying at home, build them at competitive cost, and eventually improve on what it bought or built. On each count, India’s own record currently answers “not yet.” That answer, more than any missing factory, is the quiet ceiling on an ambition that has otherwise earned the right to be taken seriously: the fleet flying abroad each year for repairs its own industry is not yet trusted to perform, and the decades of licensed production that never converted into the right to redesign, are the same gap, showing up wherever India has bought or built something it does not yet fully control.
