India's aerospace and defence (A&D) manufacturing sector is at a critical juncture, with strong demand driven by defence needs, but facing challenges in supply chain resilience, quality, and cost efficiency. The sector plays a pivotal role in India's vision of becoming a $30 trillion economy by 2047, with defence manufacturing aiming to contribute significantly to GDP and exports. However, current order book-to-revenue ratios indicate a backlog that could take years to clear, highlighting the need for operational excellence and supply chain resilience.
The report identifies key challenges across the A&D value chain, including cost overruns, price volatility, rework, resource availability, process reliability, and planning efficiency. To address these challenges and scale manufacturing, the report proposes six transformation areas:
- Supply chain efficiency: Building an indigenous, collaborative, and resilient vendor ecosystem through strategic supplier selection, rating frameworks, integrated portals, and long-term development contracts.
- Operational excellence: Implementing lean manufacturing techniques, optimising workforce planning and productivity, and leveraging digital tools and emerging technologies to eliminate rework, slippages, and cost leakage.
- Plan & govern: Adopting project-backed capacity and resource planning, integrated business planning (IBP), and robust programme management offices (PMOs) for better governance and oversight.
- R&D acceleration: Developing clear R&D roadmaps aligned with customer needs and technology trends, prioritising projects, and fostering concurrent design and early supplier participation.
- People & productivity: Optimising workforce planning and productivity through strategic alignment, systems, data and processes, and performance management, with a focus on skill upgradation and incentivisation.
- Digital thread: Leveraging digital tools like PLM, IBP, MES, and additive manufacturing to streamline processes, improve visibility, and enhance efficiency.
The report emphasizes the importance of indigenisation, critical materials, and strategic supplier portfolio design to build a resilient and scalable supply chain. It also highlights the need to learn from global models and adopt a strategic approach to accelerate technology development and achieve the vision of 'Viksit Bharat'.
