This sector has an unusual dual anchor structure. On the export-facing side, global OEMs and Tier-1s set demand through their own sourcing-diversification decisions — nobody in India can accelerate a Boeing or Safran sourcing target. On the domestic side, the Government of India sets demand and the localisation timetable directly, through defence procurement policy. Both matter; neither substitutes for the other.
"100% FDI in aerospace" is not quite what is on offer. 100% FDI via the automatic route applies specifically to MRO services. Broader defence-linked manufacturing FDI is capped at 74% via the automatic route, with the remaining headroom to 100% available only via a case-by-case government-approval route. A reader who assumes blanket 100% automatic-route FDI across every layer of this value chain is reading the policy more generously than it is written.
A Positive Indigenisation List is a ban with a delay, not a subsidy. Each of the six lists issued since August 2020 names specific platforms, sub-systems and components that may no longer be imported after a stated date — it compels domestic sourcing, but it does not itself pay for the domestic capability to exist. The sixth list (August 2026) covers 405 items worth an estimated ₹3,070 crore of business potential — real, but a fraction of the sector's total addressable procurement.
The GST simplification is the cleanest, least ambiguous policy move in the set: a uniform 5% IGST rate on all aircraft and aircraft-engine parts from July 2024, replacing a fragmented 5-28% structure that had been causing an inverted duty structure and GST accumulation specifically in MRO accounts. This is a straightforward removal of a self-inflicted handicap, not a new incentive — worth noting because it is sometimes described as more generous than it is.
