While everyone’s focus is on Fintech, Edtech, HealthTech. There is one segment which almost never made it to headlines but silently raised millions. The segment is Aviation. In just the last few weeks and months, we’ve seen a surprising surge in capital flowing into aerospace startups, regional airline initiatives, drone tech, and MRO infrastructure. This is not just about big planes or major airlines it’s about regional connectivity, hybrid-electric aircraft, drones, private jets, satellite-linked surveillance, and even sustainable aviation fuel.
Startups across the spectrum are raising serious money:
• LAT Aerospace raised $20 million from Zomato founder Deepinder Goyal, with plans to transform short-distance air travel using STOL aircraft.
• JEH Aerospace, backed by IndiGo, recently secured an undisclosed investment—just months after raising $2.75 million from General Catalyst.
• Garuda Aerospace, one of India’s most prominent drone startups, closed a ₹100 crore Series B round to scale its manufacturing and R&D.
• On the defence and heavy aerospace side, Reliance Defence, led by Anil Ambani, has announced a massive ₹10,000 crore investment plan over the next decade to bolster India’s aerospace manufacturing.
• And according to Mint, Reliance is also gearing up to launch India’s first indigenous commercial aircraft a significant milestone for the country’s aviation ecosystem.
• On January 15th 2025, there was another update where Sarla aviation has $10 million to build electric flying taxis. Not just these companies, but also some into the propulsion systems development has raised money.
What we are seeing today is the clear positive development in this segment. But this is not yet completed. This is just the start. Well, if we dig deeper and go back in time to just a month ago. There is an event that took place in June of 2025. If you rewind just a month ago, something interesting happened. In June 2025, Prime Minister Narendra Modi attended a big global aviation conference. It was a clear signal that India is betting big on aviation not just for travel, but as a key driver of growth, jobs, and tech development. And while the aviation industry is facing some global challenges like trade issues and slower demand in the West, India is going the other way. Our biggest airlines are placing massive aircraft orders. Startups are building innovative products. And the government is pushing hard with new airports, regional connectivity schemes, and open investment rules.
So, before we dive deeper into the startup specific matters, let’s understand it in the broad perspective. According to a recent report by ICRA, India’s aviation sector is set to maintain its growth momentum into FY2026. Domestic air passenger traffic is projected to grow by 7–10% year-on-year, reaching between 175 and 181 million passengers. This comes on the back of a 7.6% increase in FY2025, where domestic traffic hit 165.4 million, signalling a strong post-pandemic rebound. Notably, this number is already 16.8% higher than pre-COVID levels recorded in FY2020, highlighting a solid and sustained recovery in the sector.
And even there is a huge boom and estimates with the Drone industry. India’s drone industry is on track for massive growth, driven by strong demand from sectors like defence, agriculture, logistics, and infrastructure. According to a recent report, this surge is expected to boost the country’s drone manufacturing potential to USD 23 billion by 2030.
So, let’s get into reasons and factors for this huge boom: 1. The Rise of the Middle Class: India’s middle class has doubled in just 10 years, reaching 37.6 crore in FY24 with 15% year-on-year growth. This is creating huge demand for affordable, accessible air travel—especially on domestic routes. More people can now fly, not just dream of flying. 2. Fleet Expansion & Orders: Airlines like IndiGo and Air India are placing record aircraft orders, gearing up for a major passenger boom. The number of operational commercial planes is set to jump from 771 in 2023 to 1,100 by 2027. This means more routes, better frequency, and lower ticket prices. 3. Government Backing & UDAN Scheme: The UDAN scheme has already operationalised over 519 routes, improving air access to India’s interiors. With ₹3.85 billion FDI in aviation since 2000 and 100% FDI allowed in domestic airlines, private capital is flowing freely into the ecosystem. 4. The MRO Push: The government is also boosting the Maintenance, Repair, and Overhaul (MRO) industry with tax benefits. This sector alone is expected to touch $4 billion by 2030, creating a backbone for long-term aviation sustainability.
So where do startups come in? While policy, demand, and investment are boosting this demand therefore startups are becoming the engines that is driving this growth. Startups like LAT Aerospace (hybrid-electric STOL aircraft) and Sarla Aviation (flying taxis) are solving for regional access and urban mobility, directly aligning with the government’s push through schemes like UDAN. They’re helping connect Tier 2 and 3 cities faster, cleaner, and cheaper. Drone players like Garuda Aerospace are not just building for agriculture or delivery they’re becoming critical for defence, logistics, and surveillance, feeding into a drone market expected to hit $23 billion by 2030. Even deep-tech ventures in propulsion systems, aviation AI, and aircraft components are scaling up, thanks to relaxed FDI norms and rising interest from VCs and strategic investors. With the growing fleet size, new airports, and an expanding middle class, there’s an urgent need for tech, speed, and innovation and startups are delivering just that. This is clearly a start for the boom of aviation and aerospace industry in India, but this is not going to stop anytime soon. Let’s see how this industry will make big headlines in coming days. But with these rising demand we can expect more and more funding deals will happen in this space.
