Union Budget 2026 Scraps Customs Duty on Aircraft Components, Boosting India’s Aircraft Manufacturing Ambitions

India’s Union Budget 2026 has announced the removal of customs duty on aircraft components, a significant policy move aimed at accelerating domestic aircraft manufacturing and strengthening the country’s aerospace ecosystem.

The decision is expected to directly benefit companies such as Adani Group and Hindustan Aeronautics Limited (HAL), both of which are actively pursuing plans to expand aircraft manufacturing capabilities, including passenger aircraft programmes. By lowering input costs, the policy enhances the commercial viability of assembling and producing aircraft within India.

Industry experts view the move as a critical step in aligning India’s aviation sector with the government’s broader Make in India and Atmanirbhar Bharat initiatives. The removal of import duties on key components is likely to attract global suppliers, encourage technology partnerships, and reduce dependence on fully imported aircraft and systems.

The aviation sector has long advocated for rationalised taxation to support domestic manufacturing, citing high costs as a barrier to scaling production. The latest budgetary change addresses these concerns and is expected to improve India’s competitiveness as an emerging aerospace manufacturing hub.

As India’s air travel market continues to grow rapidly, policy support for local manufacturing is seen as essential to meeting future demand while creating skilled jobs and strengthening industrial capabilities across the aviation value chain.