New Delhi: India’s aerospace and defence manufacturing sector is entering a period of significant growth, but mounting execution challenges could emerge as a major obstacle to sustaining this momentum, according to a new study released by PwC India.
Titled “Accelerating aerospace and defence manufacturing through operational excellence and supply chain resilience,” the report was unveiled at the ET Aerospace & Defence Manufacturing Summit 2026 in Bengaluru.
The study highlights that while strong demand, increasing exports, and sustained policy support have positioned aerospace and defence manufacturing as a critical pillar of India’s economic ambitions, the industry must now address execution bottlenecks to fully capitalize on emerging opportunities.
According to PwC India, the aerospace and defence (A&D) sector is expected to play a catalytic role in India’s long-term economic transformation.
The sector is expected to contribute significantly toward the nearly 16-fold expansion in manufacturing required for India to achieve its aspiration of becoming a $30 trillion economy by 2047.
However, the report cautions that growing order backlogs across the industry could place significant strain on delivery capabilities. In some segments, existing orders could take between five and ten years to execute, creating risks for manufacturers seeking to scale operations efficiently.
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Execution, Not Demand, Emerges as Key Challenge
The report notes that India’s aerospace and defence manufacturing industry has reached a pivotal stage. Demand remains robust, exports continue to grow, and production levels are rising.
The next phase of growth, however, will depend largely on the sector’s ability to execute large-scale projects efficiently and consistently.
India currently exports defence products to nearly 100 countries. Domestic defence production reached a record ₹1.54 lakh crore in FY25, reflecting the sector’s growing importance within the national manufacturing landscape.
Despite these achievements, major manufacturers are facing substantial order backlogs:
- Order book-to-revenue multiples ranging from 1.71x to 6.88x
- Execution backlogs extending between two and seven years
- In certain segments, an estimated five to ten years required to clear existing orders
The study identifies these trends as indicators of a broader structural challenge facing aerospace and defence manufacturing, where capacity expansion alone may not be sufficient to meet rising demand.
Commenting on the findings, Dinesh Arora, Partner and Leader Advisory, PwC India, said: “The real test for India’s aerospace and defence sector is no longer whether demand exists, but whether the ecosystem can execute with speed, precision, and resilience.
As order books expand, companies will need to move beyond incremental capacity addition and fundamentally strengthen planning, shopfloor productivity, supplier coordination, and digital integration.
Those that build these capabilities early will be better positioned to convert growth momentum into reliable, globally competitive delivery. Put simply, India has the opportunity. Now it must build the execution engine to match it.”
Six Transformation Priorities for Aerospace and Defence Manufacturing
To help bridge the widening gap between order volumes and execution capacity, the PwC India study outlines six strategic transformation levers that can strengthen aerospace and defence manufacturing and improve delivery performance.
The six priority areas include:
- Supply Chain Efficiency
Enhancing supplier coordination and building stronger vendor ecosystems to improve delivery timelines and operational resilience.
- Operational Excellence
Driving productivity improvements through better shopfloor management, process optimization, and quality control mechanisms.
- Planning and Governance
Strengthening planning frameworks and governance structures to improve project execution and resource allocation.
- Research and Development Acceleration
Boosting innovation capabilities and reducing development cycles to support indigenous manufacturing growth.
- Workforce Productivity
Improving workforce effectiveness through skills development, training, and productivity enhancement initiatives.
- Digital Integration (Digital Thread)
Leveraging digital technologies to create connected manufacturing environments that improve visibility, coordination, and decision-making across the value chain.
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According to the report, these transformation initiatives can help the sector transition from backlog-driven growth to execution-led scale.
By strengthening operations, improving supply chain resilience, promoting indigenous vendor ecosystems, and adopting advanced technologies, manufacturers can increase productivity, reduce rework, and execute projects more efficiently while meeting global standards.
Building the Next Phase of Growth
PwC India believes that the future competitiveness of aerospace and defence manufacturing will depend not only on market demand but also on the industry’s ability to consistently deliver high-quality output at scale.
Captain Vishal Kanwar, Aerospace Defence and Space Leader, PwC India, said: “For India’s aerospace and defence sector, the next phase of growth will be shaped not just by demand, but by the ability to execute with consistency, speed, and precision with scale.
Companies that strengthen planning, modernise operations, and build resilient, digitally connected supply chains will be best placed to convert today’s order pipeline into timely, high-quality output at scale.”
The study concludes that while India’s aerospace and defence sector has established strong growth fundamentals, addressing execution bottlenecks through operational excellence, supply chain resilience, workforce productivity, and digital transformation will be essential for ensuring that aerospace and defence manufacturing achieves its full potential in the coming decades.
