Civil aviation is one of the fastest-growing sectors in India. India is projected to have more than 500 million domestic and international air travelers by 2030 and has the potential to become the world’s leading aviation market by 2047. In 2024, the total number of air passengers, both domestic and international, grew almost 16% over the previous year. According to the Directorate General of Civil Aviation, over 79 million passengers were carried by domestic airlines in the first half of 2024 (January-June), registering an annual growth of over four percent. The number of airports in India has doubled from 74 to 153 in nine years.  

India’s Vision 2040 strategy document outlines development needs for the sector, including a five-fold increase in the number of airports needed to handle over a billion passenger trips a year. The Airports Authority of India (AAI), a nodal authority under the Ministry of Civil Aviation, is responsible for creating, upgrading, maintaining, and managing civil aviation infrastructure in India. AAI is one of the largest airport operators in the world, owning 137 airports (24 international, 80 domestic, 23 domestic defense airfields, and 10 customs). Under its asset monetization, through public-private partnership model, AAI has an ambitious plan to privatize airports under its purview and bundle profitable airports with loss-making ones in the sales process. 

The 2016 the National Civil Aviation Policy (NCAP) includes objectives such as promoting the rapid growth of the sector, improving the ease of doing business, advancing regional connectivity, and opening opportunities for additional players in the market to meet India’s largely untapped and growing demand. To address the supply-demand gap in India, a key component of the NCAP is “Ude Desh ka Aam Naagrik,” an initiative that includes a Regional Connectivity Scheme (RCS) to make air travel more affordable and add routes and flights for unserved and underserved airports. In 2024, 102 new routes were operationalized under the RCS scheme, with the goal of 50 additional airports, heliports, and water aerodromes. RCS celebrated their eighth anniversary with 619 routes and 88 airports operationalized since the launch of the scheme, demonstrating the Indian government’s commitment to affordable air travel. The NCAP also strives to improve code share agreements, enabling designated air carriers to enter international and domestic codeshares with foreign carriers if the codeshares are in accordance with existing Air Service Agreement provisions. 

Partner Agencies

The U.S. Federal Aviation Administration’s (FAA) Aircraft Certification Service and the Indian Directorate General of Civil Aviation maintain a “Bilateral Aviation Safety Agreement with Implementation Procedures for Airworthiness” designed to facilitate the exchange of aviation products between the United States and India. The FAA and India’s civil aviation authorities continue to explore opportunities to expand bilateral cooperation. Based on its 2023 International Aviation Safety Assessment, FAA determined that India is following the international standards for aviation safety oversight.

Established in 2007, the U.S.-India Aviation Cooperation Program (ACP) is a unique bilateral public-private partnership between the U.S. Trade Development Agency (USTDA), FAA, the U.S. Departments of Commerce and State, the Transportation Security Administration (TSA),  and U.S. aviation companies, providing a forum for unified communication between the Government of India and U.S. public and private sector entities in India. 
TSA cooperates with the Indian Ministry of Civil Aviation and Bureau of Civil Aviation Security (BCAS) through bilateral Aviation Security Working Group meetings. TSA and BCAS share information related to risk assessments, capacity development, air marshal training, and other security issues through a bilateral Sensitive Security Information Memorandum of Agreement that was signed in 2013.
 

Table: U.S.-India Civil Aviation Trade Data

Data Sources: Ministry of Civil Aviation, Ministry of Commerce & Industry, Directorate General of Civil Aviation, USDOC, Bureau of the Census – Foreign Trade Division. Statistics cited for HS Code: 88, U.S. Census Bureau: Economic Indicators Division USA Trade Online, Statistics cited for Air Total Exports Value and Air Customs Value (imports), USDOC, National Travel and Tourism Office, International Air Travel Statistics - I-92 Data.
 

Leading Sub-sectors 

• Maintenance, Repair, and Overhaul (MRO): To become a global MRO hub, India has allowed 100% Foreign Direct Investment (FDI) in the MRO sector. India’s 2024-25 Union Budget introduced incentives to boost MRO activities in aviation, including extending export and re-import periods for repairs and a uniform Goods and Service Tax (GST) rate of 5% (from a 5%-28% range) on all aircraft and aircraft engine parts, bringing India’s MRO industry closer to global MRO best practices. Efforts are underway to make India a regional hub for MRO services, given its advantageous geographic location between Europe and Southeast Asia and its proximity to the Middle East. India’s growing aircraft fleet is likely to translate into an increase in demand for maintenance services and MRO facilities. 
   
• Safety and Security: Obtaining innovative aviation safety and security systems and equipment is a top priority in India, particularly with respect to India’s efforts to develop greenfield and brownfield airports across the country. Growth in this sector is anticipated to be strong, and along with airport development itself there is a nexus with India’s efforts to develop multi-modal logistics hubs across India. 
   
• Navigation and Air Traffic Management Systems: AAI continues to upgrade and modernize Air Traffic Management Services (ATMS) over entire Indian air space and adjoining oceanic areas with ground installations at all airports. With the launch of the GPS-Aided GEO-Augmented Navigation system, India became the fourth country in the world to implement satellite-based navigation systems and began utilizing satellite-based Automatic Surveillance-Broadcast services in 2019. Additionally, AAI’s recent implementation of an Automatic Dependence Surveillance System (ADSS), has enabled effective air traffic control over oceanic areas using satellite modes of communication. India’s aviation authorities continue to retain FAA Category 1 status under the International Aviation Safety Assessment (FAA IASA) program.
   
• Helicopters: To encourage demand for and usage of helicopters in the civil aviation sector, in 2020, the Indian government issued its “Policy for Promotion of Helicopter Operations,” which invites opportunities to increase fleet size and usage beyond the traditional short-haul travel, tourism, disaster management, and emergency response sectors. India has approximately 90 helicopter operators, including non-scheduled operators, private companies, state governments, and public sector utility companies, comprising a combined fleet of 280 turbine helicopters – a small fraction of the 14,000 helicopters in service in the United States. As this segment grows, there are burgeoning opportunities in fleet sales, MRO, and helicopter pilot training services and facilities.
   
• Unmanned Aircraft Systems (UAS): In February 2022, the Directorate General of Foreign Trade banned the importation of foreign drones. An exemption is in place for research and development (R&D), defense, and security purposes; however, these require specific approvals to be imported into the country. Imports of drone components do not require approval. Imports are also allowed in the form of completely built-up, completely knocked down or semi knocked down units for R&D purposes by entities such as the central or state government, government-recognized R&D institutions, and indigenous manufacturers. In August 2021, the Indian government released its “Drone Rules 2021,” with the goal of making India a global hub for drone R&D, testing, manufacturing, and operations. According to E&Y, India could have the capacity to manufacture drones worth $4.2 billion by 2025 and $23 billion by 2030. 
   
• Human Resource Development: Training and human resource development are key priorities for the Indian civil aviation sector. The supply of skilled labor has not kept pace with the industry’s rapid growth in pilots and air crews, ground staff, or airport management personnel. There are opportunities for education and training service providers across the industry, and there is untapped demand for innovative training simulators. India’s primary educational institutions for the industry, Indian Aviation Academy (IAA) and Indira Gandhi Rashtriya Udaan Akademi, continue their efforts to improve training and research in the sector. Other major private training institutes that are open to foreign collaboration include Madhya Pradesh Flying Club, Ahmedabad Aviation and Aeronautics Ltd, Rajiv Gandhi Aviation Academy, and Orient Flights Aviation Academy. India’s National Skill Development Council has a separate entity called the Aerospace and Aviation Sector Skill Council to identify needs and explore conducive environments to develop educational curricula. According to the Ministry of Civil Aviation, in early 2025 there were 38 approved Flight Training Organizations (FTO) in India, and it is expected that India will need 20,000 pilots in the next ten years. 
   
• Space: India is one of only a few countries in the world with an advanced space program and has seen rapid growth in the sector over the last several years. In August 2023, India successfully landed a spacecraft on the Moon, becoming the fourth country in the world achieve this feat, creating history as the first to land near the Moon’s south pole. In May 2020, the Indian government announced that it would allow the Indian private sector to participate in its space programs. This was a major shift in policy, and an effort to speed sectoral development and expand India’s share of the global market. India’s share of the global space market currently stands at less than two percent but is forecasted to reach ten percent within the next five to seven years. India’s space launch operations currently account for less than one percent of the global launch services market. A regulatory framework for space activities in the country was released in April 2023. India’s private sector space ecosystem is developing rapidly, and the Indian government’s steps towards privatization will create opportunities for international space companies as well. In recent years, a small number of Indian start-ups have developed innovative space systems, designed launch vehicles, and manufactured small satellites to be included in future Indian launches. As the Indian private sector gears up to play a greater role in Indian space programs, we are likely to see a commensurate rise in international tie-ups, especially where there are capability gaps. 

Opportunities 

In 2023, Tata-owned Air India ordered 470 airplanes (220 from Boeing and 250 from Airbus), while IndiGo, a market leader in passengers carried, ordered 500 Airbus A320s. In 2024, Akasa Air, India’s fastest-growing airline, announced a firm order of 150 Boeing 737 MAX. Leading aircraft original equipment manufacturers (OEMs), including Boeing and Airbus, see India as an important market for both exports and manufacturing due to the high demand for aircraft, parts and equipment, strategic geographic location, engineering expertise, and competitive labor costs. Foreign OEMs are increasingly partnering with Indian suppliers and small- and medium-sized enterprises to fulfill needs for Tier-1 suppliers and to set up an aerospace industry ecosystem within the country. U.S. companies are also likely to see opportunities in airport infrastructure and MRO projects, and in rollout of pilot and staff training facilities, against a backdrop of airports privatization. 

The MRO sector offers immense opportunities for U.S exporters in engine spare parts and components, workshop tools, testing equipment, inspection equipment, auxiliary power units, and maintenance training services. With the projected increase in fleet size over the next few years, engine maintenance is likely to be a lucrative segment, and demand is projected to grow rapidly. Both engines and airframes constitute 60-70% of the MRO sector by value. In recent years, the government has taken many steps to provide greater support to the sector. Among these steps are a reduction in goods and services tax from 18 to 5% for the MRO sector; a focus on developing high-precision manufacturing capabilities; and creation of employment opportunities for skilled manpower. The Indian government also intends to lease additional land for MRO activities across India. These efforts are targeted at making India a leading global MRO hub. \

Defense Sector Overview 

India has the third largest armed forces in the world and plans to spend billions of dollars on defense over the next several years. India’s stated policy to drastically reduce its reliance on imports, referred to as “Aatmanirbharta” (self-reliance), is perhaps the biggest strategic development related to the defense sector in recent years. The goal of this policy is to achieve domestic manufacturing turnover of $25 billion within the next five years. As part of its indigenization drive, India’s Ministry of Defense (MOD) has been creating a list of strategically important line replacement units/sub-systems/spares & components in phases. To date, more than 12,300 items have been indigenized. The government maintains that the shift is aimed at creating “an environment where public, private, and foreign entities can work together and help India become one of the leading countries in defense manufacturing.” According to the Defense Acquisition Procedure (DAP) 2020, India intends to procure all restricted items from indigenous sources. These import restrictions will likely impact current deals underway between U.S. suppliers and Indian buyers.

The Indian government’s initiative to expand indigenous defense manufacturing demonstrates the country’s determination to become more self-reliant in this sector. However, demand for innovative, next-generation technologies in a wide range of subsectors will remain. It is worth noting that certain types of defense equipment not manufactured in India are exempted from basic customs duties. The Indian government’s approach to the development of indigenous manufacturing is also outlined in the Defense Production and Export Promotion Policy 2020. Two Defense Industrial Corridors in the Indian states of Uttar Pradesh and Tamil Nadu were announced in the 2018-2019 budget, including incentives to attract manufacturers and suppliers. 

Despite efforts to develop India’s indigenous defense sector, the country’s defense manufacturing remains underdeveloped, making India an attractive market for foreign technological collaboration. Over the past ten years, U.S. companies have had increasing success in the Indian defense market, and India procured over $18 billion worth of defense equipment from the United States. India also sources subsystems, components, and OEM parts from U.S. suppliers. Major U.S. defense companies, many of which have expanded manufacturing operations in India, are on the lookout for suppliers. 

India’s defense budget for 2025 is close to $78 billion, a nine percent increase over the previous year, of which, $20 billion is earmarked for procurement of domestically manufactured weapons and military platforms. India recorded a 16% increase in its total defense production, from $13.6 billion in 2022 to $15.3 billion in 2023. The Indian defense sector has been traditionally dominated by state-owned enterprises, known as Defense Public Sector Undertakings (DPSUs), and ordnance factories that report to the Ordnance Factory Board. These DPSUs and ordnance factories comprise roughly 90% of total domestic defense manufacturing output, according to industry sources. In 2021, the government restructured the Ordnance Factory Board to create seven new DPSUs to manufacture according to the specific needs of the Indian armed forces. These new entities may potentially collaborate with the private sector for the supply of advanced military technologies. 

The new DPSUs include Munition India Limited, Pune (ammunition and explosives); Armored Vehicles Nigam Limited, Chennai (vehicles); Advanced Weapons and Equipment India Limited, Kanpur (weapons and equipment); Troop Comforts Limited, Kanpur (clothing); Yantra India Limited, Mumbai (ancillary); India Optel Limited, Dehradun (opto-electronics); and Gliders India Limited, Kanpur (parachute group). While the Indian DPSUs and private sector OEMs produce combat aircraft, naval vessels, heavy trucks, and other military equipment, they invest little in R&D. As a result, India’s defense industrial base and technologies remain underdeveloped, and Indian industry has had difficulty meeting the demand for next-generation equipment. Consequently, opportunities remain for international suppliers to provide innovative technology solutions and platforms. 

In 2016-2017, the Ministry of Defense began efforts to institutionalize, streamline, and simplify procurement procedures. These procedures were revised in the DAP 2020, an attempt by the Ministry to refine procurement procedures with a focus on self-reliance. To attract FDI from foreign OEMs, DAP 2020 increased the FDI limit to 74% and encourages foreign manufacturers to establish operations in the Defense Industrial Corridors in Uttar Pradesh and Tamil Nadu. DAP 2020 includes five procurement categories: (1) Buy; (2) Buy and Make; (3) Make; (4) Leasing; (5) Design and Development/Innovation. These categories include subcategories listing details on indigenous content requirements. The Strategic Partnership Model can be pursued separately, in sequence, or in tandem, with any of these five categories. This model aims to create a vibrant defense manufacturing ecosystem in the country through joint ventures between Indian corporates and global defense majors. Candidates in this category are selected early in the planning process and are given priority over candidates from other categories. 

The United States Military Group–India. (USMILGP India), in close cooperation with the U.S. Foreign & Commercial Service (USFCS), assists with defense advocacy cases on behalf of U.S. suppliers bidding on Indian defense procurements that meet the requisite 51% U.S. export content requirement. USMILGP India is the lead agency for Foreign Military Sales support while USFCS leads on Direct Commercial Sales. Both USMILGP India and USFCS coordinate with the U.S. Department of Commerce’s Advocacy Center in Washington, D.C. on these efforts. It is worth noting that the Indian government tendering process offers little flexibility in terms and conditions and product specifications. 

Leading Sub-sectors 

• Land Systems: The Ministry of Defense, under its Light Tank Program, plans to augment the capacity of light tanks and strengthen India’s defense capabilities. India continues to develop indigenous armored vehicles, land mobility solutions, mining and bridging solutions, artillery systems, landing gears, armament and ammunitions, land missiles, and other defense equipment. 
   
• Air Systems and Air Defense: To safeguard its forces and assets, the Indian military is looking for solutions for intrusion and tunnel detection using technologies such as heat imaging, radars, high resolution cameras, and artificial intelligence integration. For soldiers’ wellbeing and protection, the army is interested in advanced protective equipment, weight reduction of body armor, helmets, and modular materials. 
   
• Maritime Systems: With a coastline of more than 7,800 km, the Indian Navy faces a significant challenge securing the country’s maritime interests. The Indian Navy is looking to acquire robust and advanced tech solutions such as Sea Lines of Communication, underwater harbor defense, surveillance systems, mine countermeasure measures, unmanned underwater vehicles, torpedo launchers, decoy launchers, winches, missile, munition loaders, and anti-torpedo defense systems.
   
• Maintenance, Repair and Operation (MRO): Given the Indian armed forces’ aging platforms and equipment, as well as planned procurements of new advanced systems and platforms, the demand for robust MRO capabilities located in India is projected to increase.  Leading Indian MRO companies and DPSUs are exploring opportunities to collaborate with international companies to acquire state-of-the-art technologies to maintain the latest platforms. In September 2024, Lockheed Martin and TATA Advanced Systems Limited (TASL) entered into an agreement to establish an MRO facility in south India, which will support the Indian Air Force’s (IAF) existing fleet of C-130s and other global Super Hercules fleets, thereby presenting opportunities for all U.S. supply chain partners to C-130s.

Opportunities 

India enjoys a unique status as a Major Defense Partner of the United States, opening opportunities for India to procure sensitive defense technologies. Defense is one of the most promising sectors for U.S. exports to India thanks to the United States’ technological edge and India’s security needs. There is also a shared U.S.-India interest on issues such as counter-terrorism cooperation, maritime security, and weapons proliferation monitoring, making India an important partner in the Indo-Pacific region. 

The United States and India have a wide-ranging, strategic partnership in which defense and security cooperation have become a vital pillar. The vision for a strong bilateral defense cooperation was established in the 2013 Joint U.S. – India Declaration on Defense Cooperation and the 2015 Framework for the U.S. – India Defense Relationship, wherein the United States and India signaled their continued commitment to defense cooperation and promotion of regional and global security and stability. In February 2025, President Trump and Prime Minister Modi announced the U.S.-India COMPACT (Catalyzing Opportunities for Military Partnership, Accelerated Commerce & Technology) to elevate and expand strategic technology partnership and defense industrial cooperation between the governments, businesses, and academic institutions of the two countries. To advance defense ties further, the leaders announced plans to sign a ten-year ‘Framework for the U.S.-India Major Defense Partnership in the 21st Century.’

The United States supports India’s efforts to become a logistics hub in the region for repair and maintenance infrastructure for aircraft and ships while integrating Indian defense industry into global supply chains of U.S. defense and aerospace companies. The United States and India have identified the following priority projects for cooperation:

• Intelligence, Surveillance, and Reconnaissance 
• Maritime and undersea technologies
• Air Combat and Support, including Aero Engines
• Munitions systems
• Mobility
   

There will be significant integration of U.S.-origin defense systems into India’s inventory, including C-130J Super Hercules, C-17 Globemaster IIIs, P-8I Poseidon aircraft, CH-47F Chinooks, MH-60R Seahawks, AH-64E Apaches, Harpoon anti-ship missiles, M777 howitzers, and MQ-9Bs.  The leaders determined that the U.S. would expand defense sales and co-production with India to strengthen interoperability and defense industrial cooperation.  

While the Indian defense market offers substantial potential, it is a challenging market that requires patience and persistence. The Indian authorities and local partners are price sensitive. Defense procurement is tightly regulated, timelines are often long, and transparency is limited. Substantial payment delays are common. It is strongly advised that U.S. companies find reliable partners in India to assist with mitigating these issues and facilitating deals, particularly in the case of government procurements. 

For more information, please contact please contact U.S. Commercial Service Industry Specialist Sudhir.Kesharwani.