On 12 June 2025, tragedy stuck when Air India Flight 171, a Boeing 787-8 Dreamliner, crashed shortly after take-off from Ahmedabad to London, claiming 242 lives onboard and 19 on the ground. Preliminary findings have revealed that ‘Both engines lost thrust after their engine fuel control switches moved from “RUN” to “CUTOFF.” While the exact cause of the switch movement (mechanical, human, inadvertent, deliberate) remains under scrutiny, a 2018 FAA advisory had already flagged issues regarding the locking mechanism on these switches. This raises a critical question; Could a robust domestic Maintenance, Repair and Overhaul (MRO) ecosystem have caught this flaw earlier through mandatory checks or retrofits? With comprehensive MRO capabilities extending to heavy maintenance, oversight might have been more rigorous. Earlier warnings, like the FAA advisory, could have prompted mandatory checks or upgrades in India, ensuring faster compliance and mitigating risks. Although the AI-171 accident can’t yet be definitively linked to MRO shortcomings, the absence of a comprehensive domestic MRO ecosystem undoubtedly weakens India’s aviation safety framework.
India’s civil aviation sector, now the world’s third-largest domestic market, has seen remarkable growth. Annual passenger traffic at Indian airports jumped from about 341 million in FY20 to over 411 million by FY25. Projections from industry and government suggest this will rise to 470 million by FY27 (@CAGR of around 7% from FY25) and a staggering 1.1 billion by 2040, a sixfold increase from 2018 levels. To meet this burgeoning demand, India’s commercial aircraft fleet will need to expand from the current 800+ aircraft (as of 2024) to nearly 2,360 by 2040. Indian airlines are placing massive orders, including a shift toward wide-body models for long-haul routes.
In parallel, India’s defence aviation sector maintains over 2,000 aircraft, including fighters, transports and helicopters, where operational readiness is non-negotiable. Demand for drones, unmanned aerial vehicles (UAVs), Advanced Air Mobility (AAM) is also skyrocketing. These trends underscore the urgent need for a strong domestic MRO infrastructure.
MRO is a cornerstone of the aviation industry value chain, ensuring aircraft safety and airworthiness. Despite being one of the largest civil aviation markets globally, India has limited full-scale aircraft MRO players to cater to its growing demand. This supply-demand gap. Combined with India’s abundant resources and supportive government policies, creates a golden opportunity. By localising MRO facilities, India can emerge as a hub for South-Asian and Middle East, boosting safety, cutting lead-times, building skilled workforces, saving foreign exchange and generating 2,00,000 to 3,00,000 jobs.
Market Overview and Demand Drivers
Market Overview
- Commercial Aviation MRO. India’s commercial fleet expanded from 400 aircraft in 2014 to 644 in 2023, eyeing 2,360 by 2040. The segment at US$900 million in 2022, drives the broader MRO growth to US$4 billion by 2031, necessitating 200-300 annual major checks.
- Defence Aviation MRO. India’s defence aviation fleet exceeds 2,000 platforms, many aging (Mi-17 helicopters, IL-76 transports, jaguar fighter), mid-life upgrade (Mirage 2000, Su-30) and newly inducted (Rafale, Apache, chinook, C-17 Globe master, C-130J etc) fuelling a US$1.8 billion MRO market in 2021 projected to US$3 billion by 2031. Growth is propelled by low reliability, obsolescence and indigenization under Aatmanirbhar Bharat. Base Repair Depots (BRDs) handles only basic maintenance and predominantly depend upon OEMs for spares.
- Drone MRO. The drone market, valued at US$1.5-1.9 billion by 2026 and US$23 billion by 2030, integrates defence aviation via deals like the ₹34,500 crore 31 MQ-9B Predators. Local MRO mandates in JVs (General Atomics-Bharat Forge) and HAL’s Bengaluru engine facility bridge civil-defence gaps.
- Advanced Air Mobility (AAM) MRO. AAM’s US$1.42 billion market in 2025 surges to US$8.97 billion by 2031 (35.2% CAGR), tackling urban congestion in Delhi/ Mumbai/ Bangalore. Initiatives from Sarla Aviation in Bangalore, e-Plane in Chennai and healthcare drone deliveries emphasize the need for specialized MRO to sustain electric vertical takeoff and landing (eVTOL) vehicles.
- Global Capability Centres (GCCs) for MROs. India hosts over 1,700 GCCs across sectors, employing 1.6 million people and capturing 10% of global aerospace value chain. By 2030, this could expand to 2,100 GCCs, generating over US$100 billion annually. Aviation focused GCCs such as Rolls Royce’s, Collins Aerospace, Airbus Bengaluru are advancing R&D in prognostic/ Condition Based maintenance (CBM), cybersecurity and centralized IT/ support for OEMs and Tier-1 suppliers from their Indian captive centres, reducing costs by 20% via local talent.
Demand drivers.
- Fleet expansion & utilization. Commercial airlines have ordered over 1000 aircraft for delivery in the 2025 and 2030. Higher utilization will increase the need for line checks, heavy checks and shop visits.
- On-shore substitution. Complex maintenance, like engine overhauls and heavy checks, has traditionally been outsourced abroad. It is now substitutable due to policy reforms (tax rationalization), investments by airlines/ OEMs and emerging Indian heavy/ engine/ component MRO capacities.
- Defence recapitalization & life-cycle support. Defence platforms (fixed & rotary wing) require long-term sustainment. Government emphasis on indigenization opens door for public – private partnerships.
- New segments (AAM/drones). Rapid adoption of drones for logistics, agriculture, plus emerging AAM (eVTOL) roadmaps, demands specialised maintenance for battery/ propulsion, avionics and unmanned aerial systems (UAS).
Regulatory & Policy Reforms
- MRO Policy. Offers 30 year land leases, AAI royalty waivers and development at eight designated airports, plus skill centers for defence technology.
- Aatmanirbhar Bharat. Provides grants for aerospace corridors in Tamil Nadu, Karnataka and Uttar Pradesh, along with IAF Expression of Interests (EOIs) for OEM JVs.
- National Civil Aviation Policy. Simplified GST and import duties to 5% for aircraft & parts, allows 100% FDI and approvals streamlined. This eliminates historical cost barriers, improving economics for domestic MRO over overseas options.
- National Policy for Skill Development and Entrepreneurship. Emphasizes inclusivity, global standards and industry collaboration. It integrates skill development via the Aerospace and Aviation Sector Skill council, expands training facilities, promoting digital skills (e.g. drone operations), advances gender inclusion and partnering with industry for practical training and curriculum upgrades. Notably, Directorate General of Civil Aviation (DGCA) now permits candidates from arts, commerce and vocational streams to train as pilots after foundational assessments, broadening access and addressing workforce shortages without compromising on competency or safety.
- State Incentives: Examples include Odisha’s ₹80 crore support for Air Works Bhubaneswar facility (50% capital subsidy, rent/ESI relief) and Gujarat’s July 2025 MRO event signaling its hub ambitions.
- DGCA/ Drone Rules. Establishes framework for UAS operations, remote pilot licensing and type-certification helps scale drone MRO and supporting AAM safety. Permits 100% FDI in MRO permitted and mandates technology transfer in deals like HAL-SAAB for EW systems.
Opportunity segments
- Commercial aviation MRO (Near-Term / Long-Term)
- Line Maintenance at Major Hubs. Focus on A and B-checks for high recurring revenue with low capex. Scale via regional contracts with carriers & third-party providers.
- Base (heavy) Maintenance & Modifications. Involves C-checks, structural repairs for higher margins, but requires significant capex (hangars, tooling, certification). Partnership/ JV models with captive airlines, OEMs and local partners can accelerate capability. Investment by IndiGo and Air India near Bengaluru airport signal market potential.
- Engine & Component MRO: Engine overhauls are a top global revenue driver. Starting with narrow-body engines offers strong import substitution, progressing to wide-body.
- Defence aviation MRO (strategic / medium-term)
- Life-cycle support and Depot Maintenance: India’s defence modernisation creates recurring demand for sustainment, opportunities for OEM-led private sector involvement and public/ private partnership with HAL and defence estates.
- Obsolescence & Spares Ecosystem. Domestic spares manufacturing and repair networks reduce logistics delays and enable quicker turnarounds, aligning with Make-in-India initiatives and offset requirements.
- Global Capability Centre (GCC) for MRO (High-Value, Low-Footprint)
- GCC for MRO. Drives innovation in engineering, digital maintenance platforms, R&D, predictive analytics, supply chain management, certification support, cybersecurity, IT support and technical publications. GCCs enable global MRO networks to consolidate higher-value tasks in India for cost savings and talent leverage.
- Value proposition. Reduces opex for condition-based maintenance (CBM), accelerate SOPs, minimise downtime via predictions and manages spares pooling and logistics.
- Advanced Air Mobility (eVTOL) & Drone MRO (emerging / long-term)
- Drone MRO. Smaller footprint facilities for battery, propulsion, LRUs & avionics and regulatory clarity from Drone Rules accelerates scale. Opportunities in tier-1/2 cities for faster turnaround and certified repair shops.
- eVTOL/ AAM. eVTOL fleets will require innovative maintenance regimes (battery systems, electric motors, thermal management, and frequent component swaps). India is in the process of developing AAM roadmaps, it is advantageous to establish vertiports adjacent to MRO hubs.
Economics and Investment case
- CapEx Buckets. Heavy capital expenditure is required to establish MRO facilities like hangars, apron, tooling & test cells, component shops (avionics, composites, NDT), engine test beds, digital infrastructure & GCC set-up, certification and approvals.
- Revenue model. line maintenance (recurring, low margin), heavy checks & engine overhauls (projected high margin), component repair & modification (mid margin), GCC revenue (high margin, recurring subscription/ contract).
- Indicative payback drivers. Long-term contracts (5–10 yrs) with carriers, exclusive airline partnerships and capturing export MRO work from nearby markets (South Asia & Middle East) would accelerate breakeven. Market projections show India’s MRO reaching US$6 – 7 billion by 2030–2033.
Capability & skills (supply side)
- Key Skill Gap. Non availability of adequate licensed AMEs (Aviation Maintenance Engineers), avionics specialists, composite & structural technicians, engine mechanics, software/ data scientists (for GCC), UAS technicians and battery/ electrical technicians.
- Talent Supply. India has a deep engineering talent pool but needs focused vocational training & AME pipelines. Public/ private training partnerships, upskilling programs and DGCA-approved AME schools should be scaled. Align defence-trained technicians with AME certifications.
Risks & mitigants
- Regulatory/ Certification Delays. Mitigate via early DGCA engagement, hiring regulatory experts and working through OEM certification pathways.
- IP & OEM Access Constraints. Address through JVs/ licensing, OEM authorised shop status or focus initially on non-sensitive work (e.g. line maintenance, avionics swaps).
- Capital Expenditure Intensity & Asset Idling. Phased expansions (line maintenance & component overhaul → heavy maintenance → engine overhaul) to be carried out to preserve capital efficiency and secure anchor customers.
- Skilled labour shortage. Build training hubs, partner with vocational institutes, offer apprenticeship programs and employ GCC to attract talent with higher value workstreams.
Recommended phases to setup MRO facility in Aviation Sector
- Phase 1 (0–18 months). Establish/ expand line maintenance & component shops in 2–3 hubs (Bengaluru, Hyderabad, Chennai). Set up an MRO GCC for predictive maintenance and engineering support. Secure anchor contracts with major carriers.
- Phase 2 (18–48 months). Build hangars for C-checks/ heavy maintenance, engine overhaul capabilities via JV with OEM/ authorised engine MRO. Pursue DGCA base-MRO approvals concurrently.
- Phase 3 (48–72 months). Expand into defence sustainment contracts and export markets (South Asia, Middle East). Invest in AAM/ drone capability (battery labs, UAS repair) and certify for eVTOL maintenance.
- Digital & GCC. Integrate a captive GCC (engineering + data) from day one for CBM/ predictive maintenance products and reduce MTTR.
- Talent & Training. Forge AME school partnerships, apprenticeship pipelines and continuous learning program linked to DGCA approvals.
- Commercial Model. Blend captive (airline-owned), JV (OEM & investor) and third-party MRO models.
- Policy engagement. Collaborate with MoCA, DGCA and state governments to secure land/ incentives and expedited approvals (e.g. GST clarity, state GCC policies).
Conclusion
India’s aviation sector is on the cusp of explosive growth, but without a solid MRO ecosystem, it risks compromising safety, efficiency, and economic gains. By capitalizing on policy reforms, a talented workforce, and smart investments, India can fulfill its MRO needs and position itself as a global hub for South Asia and beyond. Opportunities in commercial aviation, defence, drones, AAM, and GCCs promise 200,000-300,000 jobs, foreign exchange savings, and elevated safety standards. The moment to invest is now—India’s skies are ready for takeoff.
PN: The author, Col Rajarajan M is an Indian Army veteran. Views expressed are personal.
