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The global aerospace and defence (A&D) industry is bracing for a pivotal transformation in the coming year, according to KPMG International’s newly released report, Emerging Trends in Aerospace and Defence 2025. The report identifies ten key trends expected to reshape the sector amid intensifying geopolitical tensions, rapid technological evolution, and shifting market demands.
The A&D sector, historically shaped by government spending and long-term defence strategies, is now entering a new era defined by speed, collaboration, and adaptability. KPMG’s report captures insights from industry veterans, policymakers, and its global aerospace network to offer a strategic roadmap for the challenges and opportunities ahead.
A Decade of Change Condensed into Ten Trends
The report outlines ten emerging forces likely to drive industry transformation:
Geopolitical Flux: Nations must navigate a shifting world order where innovation and rapid response capabilities will be vital to maintaining strategic advantages.
Supply Chain Resilience: Recent global disruptions have emphasised the importance of building agile and redundant supply networks.
Sustainability Imperatives: Achieving climate goals will require deeper cooperation among industry stakeholders to develop green technologies and energy-efficient solutions.
Startup Scale-Up: As venture capital flows into defence tech, the challenge lies in scaling innovations into production-ready solutions.
Faster R&D Cycles: Public defence organisations must accelerate procurement processes to keep pace with technological advances.
Digital Acceleration: Digital transformation is now a non-negotiable priority, with AI, cybersecurity, and data analytics becoming mission-critical.
Smarter M&A: Amid rising valuations, mergers and acquisitions are shifting focus from consolidation to value creation.
Workforce Transformation: A reshaped talent strategy is needed to address labour shortages and skills gaps in a highly specialised industry.
Integrated Defence Domains: Success in future conflicts will depend on the seamless integration of land, sea, air, cyber, and space capabilities.
Commercial Space Race: Space is no longer the final frontier—it’s a booming arena for economic opportunity and technological leadership.
India’s Rising Role in Global A&D
Commenting on the report, Gaurav Mehndiratta, Industry Leader – Aerospace and Defence at KPMG in India, highlighted the strategic inflection point facing the sector.
“In an era marked by geopolitical flux, rapid technological transformation, and an urgent need for resilient supply chains, the Aerospace and Defence sector stands at a pivotal inflection point,” Mehndiratta stated. “As global defence spending reaches a four-decade high and nations pursue industrial sovereignty with renewed urgency, for India to become self-reliant in defence manufacturing and gain leadership in sustainable innovation, a future-ready policy framework is essential.”
He added that aligning India’s upcoming defence acquisition policies with broader national security goals, while incentivizing private sector participation and R&D investment, will be key to accelerating the country’s leadership in the global value chain.
Private Sector Takes Centre Stage
KPMG’s findings highlight a broader trend—the blurring of lines between public and private sectors in aerospace and defence. As capital pours into emerging tech startups and multinational companies double down on digital defence, commercial players are becoming increasingly central to national security strategies.
The report also warns that rising geopolitical rivalries, cyber threats, climate risks, and competition over critical resources will continue to stress global supply chains. Defence firms will need to adopt a hybrid approach, combining the agility of startups with the scale of industrial manufacturing to stay competitive.
“This report serves as a strategic compass for industry leaders worldwide,” KPMG said, “offering a forward-looking analysis that distils the insights of global pioneers alongside KPMG’s deep sectoral expertise into ten transformative trends.”
With India’s advancements in digital defence, sovereign supply chain development, and commercial space initiatives, the country is positioned to play a significant role in this evolving global landscape.
Team BharatShakti
