India’s booming defence and aerospace sector is grappling with execution bottlenecks from rising order backlogs and limited capacity, according to PwC India and CRISIL reports.
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The country’s defence manufacturing boom may face execution bottlenecks as rising order backlogs and capacity constraints threaten to slow deliveries, according to recent reports by PwC India and CRISIL.The reports highlighted that while India’s aerospace and defence (A&D) sector is witnessing strong growth driven by rising exports, policy support, and higher domestic production, execution at scale is emerging as the industry’s biggest challenge.PwC India, in its report titled ‘Accelerating aerospace and defence manufacturing through operational excellence and supply chain resilience’, said large order backlogs could take up to a decade to clear in certain segments.Order backlogs stretch up to a decadeAccording to the report, domestic defence production touched a record ₹1.54 lakh crore in FY25, while India now exports defence products to nearly 100 countries. However, order book-to-revenue multiples for major manufacturers currently range from 1.71 to 6.88 times, translating into execution backlogs of 2 to 7 years and up to 5 to 10 years in some segments.“The real test for India’s aerospace and defence sector is no longer whether demand exists, but whether the ecosystem can execute with speed, precision and resilience,” PwC India said in the report.Need for operational improvements and digital integrationCRISIL recently flagged execution bottlenecks as a key structural challenge for the sector, noting that companies would need to strengthen operational capabilities and supply chain resilience to meet rising demand.Both reports stressed that merely adding manufacturing capacity may not be sufficient, as companies require improvements in planning, supplier coordination, workforce productivity, and digital integration to accelerate deliveries.PwC’s report said that major manufacturers currently have order book-to-revenue multiples ranging from 1.71 to 6.88, translating into execution backlogs of 2 to 7 years.India currently exports defence products to nearly 100 countries, while domestic defence production touched a record ₹1.54 lakh crore in FY25, the study added.Six transformation levers for sector growthPwC identified six key transformation levers for the sector — supply chain efficiency, operational excellence, planning and governance, R&D acceleration, workforce productivity and digital integration.Dinesh Arora, partner and leader of advisory at PwC India, said the sector’s biggest challenge has shifted from demand generation to execution capabilities.“The real test for India’s aerospace and defence sector is no longer whether demand exists, but whether the ecosystem can execute with speed, precision, and resilience. As order books expand, companies will need to move beyond incremental capacity addition and fundamentally strengthen planning, shopfloor productivity, supplier coordination, and digital integration,” Arora said.He added that companies building execution capabilities early would be better positioned to convert growth momentum into globally competitive delivery capacity.Focus on operational consistency and speedCaptain Vishal Kanwar, aerospace, defence and space leader at PwC India, said the next phase of growth for the sector would depend on operational consistency and execution speed.“For India’s aerospace and defence sector, the next phase of growth will be shaped not just by demand, but by the ability to execute with consistency, speed, and precision at scale. Companies that strengthen planning, modernise operations, and build resilient, digitally connected supply chains will be best placed to convert today’s order pipeline into timely, high-quality output,” Kanwar said.The reports added that improving these areas could help defence manufacturers reduce rework, improve productivity and build resilient supply chains aligned with global standards.Critical role in India’s long-term ambitionsIndustry experts cited in the studies said companies that modernise operations and build digitally connected manufacturing ecosystems early would be better positioned to convert strong order inflows into timely execution and globally competitive output.The defence and aerospace sector is expected to play a critical role in India’s long-term economic ambitions, supporting the manufacturing expansion required for the country’s target of becoming a $30 trillion economy by 2047.Published on June 8, 2026
