The flight from defence to civilian space : evolution of the sectoral system of innovation of India's aerospace industry

India is one among the few developing countries that have sought to establish an aerospace industry. The industry has two components, namely aeronautical and astronautic. I first map out the sectoral system of innovation of this industry which is actually located as a cluster in the south Indian city of Bangalore. The paper identifies the three building blocks of the cluster: lead actors, knowledge or technology domain, and the demand. Changes in each of these blocks over time are discussed. The study concluded with a comparison of the performance of the sector in terms of exports and competitiveness and also delves on the policy instruments that are required for placing the industry on a sure flight path. Key words: India, sectoral system of innovation, aerospace industry, aeronautical, astronautic, offset policy JEL Classification: L62; O31; O32; O34