India’s Policy Push to Boost Aerospace Manufacturing: Thales

Why It Matters

The policy push creates a fertile ecosystem for both domestic and foreign firms, positioning India as a major global aerospace hub and unlocking new export opportunities for companies like Thales.

Key Takeaways

• PLI scheme aims to attract domestic and foreign aerospace component makers
• Defence budget rises to ~₹7.85 lakh crore ($95 bn), 15% YoY increase
• UDAN 2026‑36 outlay of ₹28,840 crore ($3.5 bn) targets 100 new airports
• Thales partners with 75 Indian suppliers, supporting ~2,000 indirect jobs
• Thales will add 450 engineers in India, expanding AI and cyber capabilities

Pulse Analysis

India’s aerospace ambition is now underpinned by a suite of policy levers that signal long‑term commitment. The production‑linked incentive (PLI) scheme for component manufacturing, coupled with a 15% uplift in the defence budget to roughly $95 billion, lowers cost barriers for both local and multinational players. Simultaneously, customs‑duty exemptions on parts used in maintenance, repair and overhaul (MRO) activities and a $3.5 billion UDAN investment to upgrade 100 regional airports create a robust supply chain and demand pipeline, projecting passenger traffic to six‑fold by 2040 and an MRO market worth $4 billion by 2031.

For Thales, the policy environment dovetails with its "Make in India, Innovate in India, Export from India" strategy. The firm now works with more than 75 Indian suppliers, generating roughly 2,000 indirect jobs, while its workforce of 2,400 engineers and technologists expands to an additional 450 hires focused on artificial intelligence, cyber security and unmanned aerial systems. Recent milestones, such as equipping Air India’s 787‑9 fleet with the AVANT Up inflight‑entertainment platform, illustrate Thales’s deepening integration across avionics, airport‑operations control centres and Digi‑Yatra digital‑identity solutions.

The broader implication for the industry is a shift toward a more self‑sufficient, export‑ready aerospace ecosystem. With clear fiscal backing, streamlined customs, and a growing domestic talent pool, India is poised to attract further foreign direct investment and become a competitive supplier to global OEMs. Companies that embed themselves early in the localisation chain stand to benefit from scale economies, access to a burgeoning MRO market, and the ability to leverage India‑based R&D for next‑generation aerospace technologies. This convergence of policy, capital and talent marks a pivotal moment for the sector’s evolution over the next decade.