Created around 1965, mainly to accommodate HAL employees, Sunabeda is a planned and organized township. It is situated around 1,000 meters above sea level. Prior to its creation, this place was known as Old Sunabeda which was occupied by native tribal community. About a thousand tribals in and around Chikapar village were displaced and rendered homeless to give way for the HAL factory.^[1] Even though the factory was made with Russian collaboration, the township and factory buildings were executed by state engineers of Odisha. The project was named Aero Engine Factory (AEF) Project. The residential colony is called AEF Colony with a Chief Engineer responsible towards it.

After the 1971 Indo-Pakistani War a shelter camp for the Bangladeshi refugees was constructed which became Sunabeda–3, which today predominantly comprises Bengali Hindu people. The Odisha Small Industries Corporation established the Odisha Timber and Engineering Works adjacent to NH-43. Most Bengali people joined here as carpenters. When the Kolab dam was constructed a catchment formed around Sunabeda in the form of a big lake. Some of the Bengali people took to fishing and today Sunabeda is a centre for making fishing boats and nets for which fishermen from as far as Malkangiri come to buy their provisions.

There was little growth in Sunabeda and on the other hand the hustle and bustle gradually started dwindling as the AEF project closed after commencement of production in HAL. Similarly fresh recruitment in HAL stopped after a while and people started retiring and the post remained vacant as the Mikoyan (MIG) series of aircraft was losing out to new series of aircraft.

In the late 1980s the setting up of the NAD and the National Aluminium Company (NALCO) in Damanjodi kept the overall situation alive in Sunabeda and Semiliguda. Things started looking brighter after the Sukhoi Su-30 production meant a new division in HAL. The arrival of the battalion headquarters of Central Reserve Police Force (CRPF) Commando Battalion for Resolute Action (COBRA), as well as the Central University and the Indira Gandhi National Open University (IGNOU) are hoped to provide some growth to the area.