ARSENALIND
Supply chain
06

MRO, Upgrades & Exports

The ₹38,424 Cr surprise — exports became the fastest-compounding line in the sector

DevelopingImport dependence 45%Margins: HealthyOligopoly

Sustainment and exports are converting India's installed-base liability (600+ legacy Russian aircraft, 1,300+ T-72/T-90s, aging fleets everywhere) into an annuity, while exports compound at rates no domestic budget line can match: ₹1,521 Cr (FY17) → ₹23,622 Cr (FY25) → ₹38,424 Cr (FY26). Private sector supplies roughly two-thirds of exports — this is not a DPSU story. BrahMos to Philippines proved the sovereign-sale playbook; Akash, Pinaka, ATAGS and 155mm ammunition are queued behind it.

Export engine breakdown

  • ▸Ammunition + energetics is the volume base: 155mm shells, propellants, fuzes to Europe (via NATO-member intermediaries) — Solar Industries and Munitions India are primary beneficiaries.
  • ▸BrahMos: Philippines $375M delivered; Indonesia/Vietnam negotiations recurring. Each export batch pulls PTC castings, Godrej airframes, propellant fills.
  • ▸Akash SAM: Armenia operational; Brazil evaluation public. BDL + BEL split integration/electronics per batch.
  • ▸US/Europe civil-aero MRO reads across: HAL's engine MRO JVs (Safran LEAP shop sanctioned) build the skills base military sustainment will reuse.

Sustainment economics

  • ▸MRO gross margins run 2-3x new-build for the same yard/line — every fleet year added to Su-30/Scorpène life is high-margin backlog.
  • ▸Su-30 upgrade program (₹65K Cr proposal: Virupaksha AESA + EW + weapons) would be the largest single sustainment order in Indian history — HAL prime, BEL/Astra/Data Patterns electronics.
  • ▸Performance-based logistics (PBL) contracts are appearing in RFPs — recurring-revenue conversion of what was spares-by-tender.

Watch items

  • ▸FY27 export print vs ₹38,424 Cr base — the ₹50K Cr by FY29 official target implies 14% CAGR; private mix above 60% keeps quality high.
  • ▸SCOMET license throughput (export-control clearance speed) — the practical rate-limiter on ammunition exports.
  • ▸Su-30 upgrade CCS approval and HAL work-share announcement.

Players at this stage

Private / PSU-unlisted
Air WorksAIESLBrahMos Aerospace
Global benchmark
ST EngineeringLufthansa TechnikAAR