From imported engines to MSME growth: India’s missing opportunity

MSME Business Strategy Desk

India invested ₹2,101 crore in Kaveri, but spent over ₹23,000 crore importing fighter engines. The numbers reveal a strategic lesson for both policymakers and MSME leaders.

India can launch satellites into space, build nuclear submarines, develop ballistic missiles and produce some of the world’s finest engineering talent. Yet one critical technology continues to remain beyond its grasp — the indigenous fighter aircraft engine.

This is not merely a defence story. It is a story about leadership, industrial strategy, long-term investment and the consequences of underfunding critical technologies.

The lessons extend far beyond the Indian Air Force. Every MSME founder, industrialist and policymaker should pay attention.

Why India Still Depends on Retired Jaguar Aircraft

The Indian Air Force inducted the Jaguar deep-penetration strike aircraft in 1979. Nearly five decades later, India continues to operate approximately 120 to 160 Jaguars, making it the world’s last significant operator of the platform.

The problem is that Britain and France retired their Jaguars years ago. Production lines have closed, suppliers have disappeared and the original component ecosystem has largely ceased to exist.

To keep these aircraft flying until their planned retirement, India periodically purchases retired Jaguar airframes from Europe. These aircraft are not bought for operational use. They are dismantled for spare parts.

Landing gear assemblies, hydraulic systems, structural components, fuel pumps and various certified parts are salvaged and reused to support the existing fleet.

While economically sensible in the short term, this approach exposes a larger strategic weakness.

A nation aspiring to become a global defence manufacturing power should not depend on foreign scrap yards to sustain combat aircraft.

The Engine Problem

The Jaguar’s biggest challenge is not its airframe.

It is its engine.

Over the years, India upgraded the aircraft with modern avionics, radar systems, electronic warfare suites and enhanced weapons capability. However, the aircraft continued to rely on ageing propulsion systems designed decades earlier.

As the aircraft gained weight and capability, performance limitations became increasingly apparent.

The obvious solution appeared to be re-engining the fleet.

However, the economics quickly became daunting.

A proposal to replace the ageing engines with modern American powerplants carried an estimated cost of approximately $2.4 billion, or nearly ₹20,000 crore.

For aircraft already approaching the latter stages of their operational life, the investment became difficult to justify.

The programme was eventually shelved.

The consequence was simple.

India continued depending on ageing aircraft and imported components because it lacked a domestic alternative.

The Kaveri Story Is Not About Failure

Whenever the discussion turns to indigenous jet engines, the Kaveri programme inevitably enters the debate.

The programme is frequently described as a failure.

That assessment is incomplete.

India did not fail because it lacked engineers.

India did not fail because it lacked scientists.

India did not fail because it lacked metallurgical expertise.

The more important question is whether India invested enough to succeed.

The GTX-35VS Kaveri engine programme, initiated in 1989, received a total expenditure of approximately ₹2,101 crore over nearly three decades.

At first glance, this appears to be a substantial investment.

In reality, it was modest by global aerospace standards.

Developing a modern military turbofan engine is among the most complex engineering tasks undertaken by any nation.

Global aerospace powers routinely spend between ₹25,000 crore and ₹40,000 crore — equivalent to $3 billion to $5 billion — on a single advanced engine programme.

That means India attempted to achieve one of the world’s most difficult technological breakthroughs with less than ten percent of the funding typically committed elsewhere.

Despite these constraints, Indian scientists achieved notable progress in turbine technology, metallurgy and high-temperature materials.

Yet the programme struggled to achieve the required performance parameters for frontline fighter aircraft deployment.

The lesson is not that India lacked capability.

The lesson is that capability without sufficient investment rarely delivers strategic outcomes.

Five Numbers That Tell The Story

Strategic Issue	Amount
Kaveri Engine Development	₹2,101 crore
Global Engine Development Benchmark	₹25,000–40,000 crore
Jaguar Re-Engining Proposal	~₹20,000 crore
Imported GE Engine Contracts	More than ₹23,000 crore
Jaguar Fleet Strength	120–160 aircraft

These figures reveal an uncomfortable reality.

India spent approximately ₹2,101 crore attempting to develop indigenous engine technology.

Subsequently, it committed more than ₹23,000 crore importing foreign fighter engines.

In simple terms, the nation spent over ten times more purchasing technology than it invested in developing its own.

This is the central lesson of the entire story.

The Strategic Cost of Underinvestment

The debate is not about whether importing engines was necessary.

The Indian Air Force needed operational aircraft and could not wait indefinitely.

The real issue is whether decades of underinvestment created that dependency in the first place.

Every imported engine represents not only foreign expenditure but also lost opportunities for domestic capability creation.

When critical technologies are not developed locally, nations inevitably pay elsewhere.

The bill merely arrives later and often at a much higher cost.

MSME entrepreneurs understand this principle instinctively.

A company that postpones investment in capability eventually spends far more correcting the consequences.

Nations are no different.

The MSME Opportunity Hidden Inside a Jet Engine

The biggest mistake is to view fighter engines purely through a military lens.

A modern military jet engine contains thousands of precision-engineered components.

Each engine requires advanced castings, specialised alloys, thermal coatings, precision machining, sensors, control systems, electronic assemblies and testing infrastructure.

No single organisation can manufacture everything.

Successful engine programmes create entire industrial ecosystems.

If India masters indigenous fighter engine production, the benefits will extend far beyond defence laboratories and public sector units.

Thousands of MSMEs will become suppliers.

Precision machining companies will manufacture critical components.

Metallurgical firms will develop specialised materials.

Electronics manufacturers will produce sensors and control systems.

Testing and certification companies will emerge as specialised service providers.

Tooling and automation firms will find new markets.

Engineering graduates will find opportunities in high-value manufacturing rather than low-cost assembly work.

This is how aerospace ecosystems are built.

The Road to Genuine Defence Leadership

True defence self-reliance is not achieved by assembling imported systems.

It is achieved by mastering the technologies at the heart of those systems.

For fighter aircraft, the engine is that technology.

India has already demonstrated its ability to succeed in space technology, missile systems and advanced defence platforms when national commitment aligns with long-term investment.

The same approach must now be applied to propulsion technology.

The lesson from the Kaveri programme is not that India failed.

The lesson is that strategic technologies require strategic funding, strategic patience and strategic vision.

The day India designs, develops and manufactures world-class fighter engines at scale, the achievement will extend far beyond military aviation.

It will create thousands of high-skilled jobs, strengthen domestic manufacturing, generate opportunities for MSMEs, reduce dependence on foreign suppliers and establish India as a genuine aerospace power.

Only then will India move from being one of the world’s largest defence buyers to becoming one of the world’s most influential defence manufacturers.