New Delhi: India’s youngest state Telangana is on course to becoming one of the country’s most vital anchors for aviation and defence with exports corresponding to these sectors accounting for a third of the state’s exports in the financial year 2025-2026.
For the first time since 2014 when Telangana was carved out of Andhra Pradesh, aerospace and defence exports have surged past the state’s pharma exports which held firm for more than five decades, the state’s socio-economic outlook released in March has revealed.
Pharmaceutical exports accounted for a little over 25 percent of the state’s total exports in FY 2026, while aerospace and defence exports accounted for 33.4 percent, according to data shared by Telangana’s Directorate of Economics and Statistics.
In rupee terms, the state’s exports soared from Rs 15,900 crore in FY 24 to Rs 32,850 crore in FY 26, more than doubling in two years.
“A vibrant innovation ecosystem and a focussed shaping of the state’s industrial policy to include tax and other financial concessions to start-up firms across sectors, including aerospace and defence, have helped the state embark on diversifying its export basket,” said P.A. Praveen, director, Aerospace and Defence, government of Telangana.
“Successive governments have been able to create a conducive environment for large-scale transformation and modernisation of production facilities,” he told ThePrint.
Major areas of defence exports from Telangana include aircraft, drones, missiles, and advanced defence electronics. In partnership with Lockheed Martin and Boeing, more than 2,000 aircraft components, including fuselage sections and avionics, are exported each year from the state to the US and Europe.
The establishment of France’s Safran–CFM Aero Engine MRO facility in Hyderabad last November catapulted the state to among the fastest growing aviation hubs in the world.
Hyderabad has hosted more than 25 large companies and 1,000+ Micro, Small, and Medium Enterprises (MSMEs) since the early 1960s, a senior civil servant who served as united Andhra Pradesh’s industries secretary told ThePrint. Adding to the output of the state’s burgeoning aerospace industry are at least 15 start-ups.
The city has been home to premier research and defence establishments such as Defence Research and Development Organisation (DRDO), Defence Research and Development Laboratory (DRDL), Research Centre Imarat (RCI), Bharat Dynamics Limited (BDL), Mishra Dhatu Nigam Limited (MIDHANI), Ordnance Factory, ADRIN, and Defence Metallurgical Research Laboratory (DMRL), forming a robust ecosystem supported by more than a dozen major DRDO labs and defence PSUs.
The state has also developed four aerospace parks since 2008, when the GMR Hyderabad International Airport (GHIAL) became operational as India’s first privatised greenfield airport. Over the years, two hardware parks, and 50 other engineering parks have been created in Aerospace SEZs at Adibhatla and Kothur, creating an environment conducive to aerospace and defence manufacturing. Given the ecosystem, Tata Advanced Systems, Mahindra Aerospace, and Adani Aerospace established their units.
“Defence being a strategic and high-security industry for India, the achievements have always been kept under wraps and the numbers are never made public. But the Atmanirbhar Bharat push has helped fuel a lot of interest in the defence sector with young entrepreneurs revolutionising the way we approach this sector,” PA Praveen said.
Together with vintage defence PSUs, the industrial ecosystem in Telangana caters to the Indian Space Research Organisation (ISRO), besides the Army, paramilitary forces, DRDO, and system-level providers. A substantive increase in domestic defence PSU orders in the last 10 years have furthered the state’s defence manufacturing capabilities with companies in Hyderabad being able to supply military hardware exports on a sustained basis.
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Telangana exports: Role of import duties, GST
Leaders from companies that manufacture critical components here concur that the central government’s support in slashing import duties on key components and GST rate rationalisations have strengthened the sector’s competitiveness.
In successive Budgets since 2016, GST rates have been reduced for unmanned aircrafts (from 28/18 percent to 5 percent), two-way radios, tanks and other armored fighting vehicles and parts (12 percent to 5 percent) and target motion simulator, sub-assemblies of HACFS (High Altitude Containerised Field Shelters), parts for MRSAM (Medium Range Surface-to-Air Missile) system, parts for IADWS (Integrated Air Defence Weapon Systems), military transport aircraft, etc. (IGST 18 percent to nil).
“This tax reduction lowers manufacturing costs, enhances export competitiveness, boosts R&D capability, and supports efficient domestic procurement and budget utilisation across the aerospace and defence value chain,” said Sree Chaithra Janapati from the World Trade Centre at Shamshabad where the GMR-Aerospace industrial cluster operates from.
She added that Hyderabad could become India’s aero-engine capital by 2030. The state’s four-fold objective of investing in and modernizing MSMEs, advancing capabilities to deliver high-precision components, sub-systems, and structures for next-generation aircraft and defence programmes, roping in global equipment manufacturers to add to the tiered supply base, and establishing MROs and skilling centres have helped created a holistic environment for research, design, and skilling in Hyderabad.
The state has focussed on skilling as a central component to bolstering the aerospace ecosystem. The state has upgraded 100 Industrial Training Institutes into Advanced Technology Centres in collaboration with Tata Technologies, and the Young India Skills University now offers specialised training in aircraft maintenance.
The chief minister also invited Safran to partner in future aerospace and MRO skilling initiatives. According to government officials in the industries department, more than 30,000 individuals have received training in accredited courses and close to 15,000 securing employment in these institutes since 2016.
“The Telangana Academy for Skill and Knowledge (TASK) partnership with global aerospace and defence firms has helped many graduates transition directly into high-tech roles within leading firms like Boeing, Lockheed Martin, and Tata Advanced Systems,” said a state government official who did not wish to be named.
“Global aerospace supply chains are shifting toward trusted, cost-competitive suppliers with quality manufacturing and design capabilities, with the ability to supply reliably at scale. India has the engineering talent and the strategic positioning. This partnership with the government of Telangana is about selectively investing in MSMEs, building capabilities in high-precision mechanical and electronic components and software, and supporting the needs of aircraft manufacturers and Tier 1 suppliers globally,” said Sri Thota, Founder & CEO of SARGAD. SARGAD signed a Memorandum of Understanding (MoU) in January this year to partner with the Telangana government to modernise MSMEs into world-class aerospace & defence suppliers. SARGAD is an operator-led industrial and investment platform with experience across aerospace, defence, automotive, clean energy, and data center manufacturing sectors, focused on IP-driven industrial businesses.
According to Deloitte, India recorded its highest-ever defence production in FY25 with the manufacturing of different components and products pegged at Rs 1.54 lakh crore.
The increased import dependence and export ambition of companies in Bangalore, Hyderabad, and Pune has led India to up its manufacturing target to Rs 3 lakh crore by 2028–29 and Rs 8.8 lakh crore by 2047.
“Telangana’s A&D sector is poised to grow steadily aided by government support, strategic investments, and a skilled workforce. However, to address challenges of increased competition from other states and potential global disruptions, Telangana needs to streamline regulatory processes to attract investment, enhance collaboration between industry and academia for skill development, and invest more in innovation through incentives for research and development,” Chaithra Janapati said.
(Edited by Nardeep Singh Dahiya)
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