India Budget 2026 Boosts Aviation with Duty‑Free Manufacturing Push and Industry Incentives

India’s Union Budget 2026‑27 introduced several measures aimed at strengthening the nation’s aviation ecosystem and boosting domestic aerospace manufacturing, responding to long‑term industry growth and global competitiveness goals.

A key focus of the budget was to promote aviation and aerospace manufacturing by offering customs duty incentives on imported components and parts used in the production of civilian aircraft and related assemblies. This duty exemption is designed to reduce input costs and encourage domestic industry participation in aircraft build and maintenance segments, supporting the government’s *Make in India* vision for civil aviation. 

By reducing Basic Customs Duty (BCD) on components and parts used in aircraft production and maintenance, the budget aims to make India an attractive destination for aerospace firms and global suppliers. The exemptions are expected to benefit indigenous manufacturing, repair, maintenance and overhaul (MRO) activities, and support the development of civil aviation supply chains. 

The move aligns with broader national priorities to move up the aviation value chain — transitioning from a primarily flying and services market to one that also designs, builds and maintains aerospace products. Recent government statements at industry forums highlight India’s ambition to become an integrated aviation ecosystem encompassing aircraft design, pilot training, aero‑engine manufacturing and advanced air mobility platforms.

Industry stakeholders welcomed the duty‑free push as a significant step toward reducing dependence on foreign imports, enhancing competitiveness and attracting foreign direct investment in civil aerospace. Analysts say such incentives will bolster local manufacturing capacity, create high‑skilled jobs and accelerate India’s role in global aircraft component supply chains.

In addition to duty exemptions, the budget’s overall emphasis on manufacturing growth and infrastructure spending provides an enabling backdrop for aviation, with expanded capital expenditure aimed at transport, airports and supply‑side support for strategic sectors. Aviation industry participants say this could help address long‑standing bottlenecks in airport infrastructure and aviation manufacturing clusters.

As Indian airlines scale up fleet sizes and new greenfield airports come online, the Budget 2026 measures are expected to support both sectoral expansion and sustainable aviation goals, reinforcing the government’s commitment to making India a global aviation hub.