India's Aerospace and Defense (A&D) sector is witnessing remarkable growth, driven by increasing domestic demand, supportive government policies, and the "Make in India" initiative. For entrepreneurs and enterprises, entering this high-potential market offers significant opportunities in manufacturing, R&D, system integration, and supply chain support. However, setting up a business in this sector requires careful planning, adherence to regulatory frameworks, and technical capabilities.

This guide outlines the step-by-step process to start an Aerospace and Defense business in India.

Step 1: Conduct Market Research & Define Your Business Model

Before diving into the setup, conduct thorough market research to identify your niche:

• Aircraft components or systems manufacturing
• Defense electronics
• UAVs/Drones and related tech
• Maintenance, repair & overhaul (MRO)
• Subcontracting for larger OEMs
• Engineering or design consultancy

Choose a domain aligned with your capabilities and analyze competitors, cost structures, global trends, and government tenders to position your business strategically.

Step 2: Choose the Right Business Structure

Selecting the right legal entity is critical for smooth operations and eligibility for government contracts:

• Private Limited Company (most preferred for scalability)
• LLP (Limited Liability Partnership) – for partnerships with shared risk
• OPC or Proprietorship – only for small-scale R&D or consulting setups

Register your entity through the Ministry of Corporate Affairs (MCA) and obtain a Certificate of Incorporation.

Step 3: Apply for Required Registrations and Licenses

The Aerospace and Defense sector in India is heavily regulated. The following are mandatory registrations:

1. Industrial License (IL) from DPIIT & Ministry of Defence

• Required for manufacturing defense items under the Arms Act, 1959.
• Apply via the eBiz portal or SUGAM portal of DPIIT.
• Additional clearance from MoD and MHA may be needed.

2. Import Export Code (IEC)

• Required if you plan to import machinery or export components.

3. UDYAM/MSME Registration

• Helps in availing government subsidies and priority in public procurement.

4. DRDO/ISRO Vendor Registration

• Essential for participating in defense tenders or supplying parts.

5. GST Registration

• Mandatory for all businesses exceeding turnover limits.

6. FSSAI, Factory License, Fire NOC (if applicable)

• Depending on your manufacturing unit setup.

7. Security Clearance

• Especially if your operations involve sensitive technology or strategic locations.

Step 4: Capital Planning and Investment

The A&D industry is capital-intensive. Your funding may involve:

• Self-investment
• Angel investors or HNIs with defense industry exposure
• Venture capital (for tech-focused startups)
• Strategic partnerships with foreign OEMs under FDI route (up to 74% automatic, 100% with Govt. approval)

Step 5: Infrastructure, Technology, and Workforce

Set up your infrastructure based on your niche:

• Manufacturing Unit: Compliant with industrial safety, quality controls (ISO 9001, AS9100), and pollution control norms
• Design & Engineering Centre: High-end CAD/CAM tools, simulation software, prototyping labs
• R&D Lab: Focus on innovation, testing, and system development

Hire qualified aerospace engineers, defense consultants, quality controllers, and technicians. Collaborate with IITs, DRDO, or private engineering institutions for knowledge exchange.

Step 6: Compliance and Quality Certifications

Obtaining relevant quality certifications boosts your credibility:

• ISO 9001, AS9100 for aviation/aerospace quality management
• NABL Accreditation for testing labs
• DGQA, DGAQA, or CEMILAC Approval – for supplying to Indian Armed Forces
• Offset Partner Registration – if collaborating with global OEMs under defense offset policy

Ensure regular compliance with:

• ESI, PF, Professional Tax
• Labor law filings
• GST and Income Tax returns

Step 7: Marketing and Business Development

To grow your brand:

• Register on GeM (Government e-Marketplace) and Defence Procurement Portal
• Attend defense expos like DefExpo, Aero India
• Network with DRDO, BEL, HAL, and private players like Tata Advanced Systems, L&T Defence
• Build a strong digital presence – website, brochures, email campaigns
• Consider export opportunities to countries under defense collaboration agreements

Conclusion

The Aerospace and Defense industry in India offers a unique blend of national importance, long-term contracts, and high entry barriers—which, when crossed, provide stability and profitability. With structured planning, strong compliance, and the right team, you can successfully establish a business that not only scales commercially but also contributes to India’s self-reliance in defense and technology.

For assistance with company registration, DPIIT licensing, MSME enrollment, or vendor onboarding, contact Team TAXAJ – your trusted partner for compliance, licensing, and strategic business advisory.