### The Strategic Supply Chain Realignment
The recent interim trade agreement framework between India and the United States, finalized on February 7, 2026, marks a significant recalibration of the global aerospace manufacturing landscape. By granting zero-duty access for aerospace components exported from India to the U.S., the pact places India on par with long-standing supply chain powerhouses in Europe, Japan, and South Korea. This move is supported by reciprocal tariff reductions on aerospace products, lowering them from previous levels, with specific components now subject to zero tariffs or significantly reduced rates.
This development is not merely an incremental boost but a strategic elevation for India's aerospace sector, which is projected to grow substantially, reaching an estimated $21.48 billion by 2030 with a compound annual growth rate of 6.8%. India's share in the global aerospace supply chain, currently around 2%, is anticipated to rise to 10% as domestic firms scale operations and move up the value chain. This enhanced competitiveness is underpinned by cost advantages, offering savings of 15-25% in manufacturing activities compared to established global hubs, coupled with a growing pool of skilled engineering talent.
Global Original Equipment Manufacturers (OEMs) like Boeing and Airbus are accelerating their engagement with India, viewing it as a crucial foreign OEM base. Boeing's annual sourcing from India has reached approximately $1.3 billion, with intentions to double its procurement and establish India as one of its largest overseas component suppliers. Similarly, Airbus plans to increase its Indian sourcing to $2 billion annually by 2030, up from its current $1.4 billion, leveraging India's engineering prowess and manufacturing capabilities. This strategic pivot is partly a response to global supply chain disruptions and a drive for diversification.
### The Aviation Market Boom
The agreement's impact extends directly to fueling India's rapidly expanding aviation market, which is forecast to become the world's third-largest by 2026. Government officials estimate that Indian carriers could place aircraft, engine, and spare orders valued between $70 billion and $80 billion in the coming years. This projected demand surge is supported by substantial existing order backlogs; for instance, the Air India Group alone has ordered 220 Boeing aircraft and an additional 100 Airbus planes. Boeing anticipates delivering around 24-25 aircraft to Indian customers in 2026, reflecting an anticipated increase in production rates. Boeing forecasts that airlines in India and South Asia will require nearly 3,300 new commercial jets by 2044.
The Indian aviation market is expected to grow significantly, projected to expand from USD 14.78 billion in 2025 to USD 16.53 billion in 2026, with a forecast reaching USD 28.96 billion by 2031 at an 11.86% CAGR. This growth is propelled by robust economic expansion, a burgeoning middle class, and increased passenger traffic, which rose by 9% in India during 2025.
### The Forensic Bear Case
Despite the optimistic outlook, several headwinds and structural challenges temper the immediate upside. The core risk lies in the industry's dependence on large OEMs like Boeing and Airbus; fluctuations in their production schedules or global demand directly impact Indian suppliers. Delays in Boeing's production, stemming from regulatory actions and operational issues, have already affected delivery timelines for Indian carriers, potentially slowing fleet expansion plans.
Furthermore, while India possesses significant engineering talent, scaling capabilities beyond machining to capture higher-value segments of the aerospace value chain presents a critical hurdle. Bottlenecks in skills development, capital investment, and certification processes require sustained attention. Infrastructure limitations, including inadequate specialized facilities, and technological dependencies on foreign suppliers also pose risks to self-reliance and supply chain resilience. The competitive intensity is high, and the global aerospace market itself faces ongoing fragility from geopolitical turbulence, persistent OEM production challenges, and rising airline costs.
### Future Outlook
The India-U.S. trade pact serves as a powerful catalyst, firmly positioning India as a central player in the global aerospace supply chain. The confluence of preferential trade access, OEM strategic sourcing shifts, and robust domestic market demand creates a compelling growth trajectory. India's aerospace sector is poised for significant expansion, driven by increasing integration into international manufacturing networks and substantial aircraft orders from its burgeoning aviation industry. Continued investment in advanced manufacturing capabilities, workforce development, and infrastructure will be crucial for India to fully capitalize on this reconfigured global aerospace dynamic and mitigate inherent supply chain and market-related risks.