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Business News/ Companies / News/  ‘Boeing to source more parts from India’
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‘Boeing to source more parts from India’

While Boeing and Embraer are evaluating manufacturing opportunities in India, French competitor Airbus has no plan to assemble planes in India

Boeing India president Salil Gupte.Premium
Boeing India president Salil Gupte.

New Delhi: American aerospace giant Boeing is strategically increasing sourcing of aircraft components from India, and is also exploring the potential to set up a manufacturing unit to tap the opportunities offered by the fastest growing aviation market, a senior executive said in an interview.

“We have plans to increase overall sourcing from India. Aircraft manufacturing is very different from manufacturing smartphones, as a lot of value comes together in the final assembly in the latter. In civil aviation, the airplane ecosystem is very distributed regardless of the location of the final assembly. The value for India is to do more and more on various components of an airplane, and that is precisely where we are focusing," Boeing India president Salil Gupte said.

“We continue to evaluate the business case for assembly and rate increases as demand for our products grow. Volumes required for final assembly of commercial airplanes are far greater than that required for defense, and a business case would require a larger regional market" Gupte added.

Indian aviation made rapid strides to arrive on the global stage recently especially in the last one year, with domestic air traffic touching new highs, after surpassing the pre-covid peak. Besides, Indian airlines Air India and IndiGo, have also created history by placing two of the largest aircraft orders for 470 and 500 aircraft, respectively, in 2023.

Mint exclusively reported in June that Brazilian aerospace firm Embraer, the third-largest passenger jet manufacturer in the world, is in talks with the Tata and Mahindra groups to form an alliance for aircraft manufacturing.

While Boeing and Embraer are evaluating manufacturing opportunities in India, French competitor Airbus has no plan to assemble planes in India. Airbus has an aircraft assembly facility in China.

According to Gupte, India’s high air traffic demand is not a temporary phase but a more structural shift that will lead to higher demand growth.

“....this is not due to temporary burst of demand or travel or revenge travel or anything. This is a long-term structural growth pattern in India that is driven by a growing economy, a growing middle class and an increased desire to fly. People are transitioning from other modes of transportation to the skies," Gupte added.

Considering the sustainable demand, Boeing also recently increased its market outlook for the Asia Pacific, including India by over 10%. According to its revised estimates, 2,500 aircraft are coming into India over the next 20 years as compared to 2,200 earlier. “India is going to be the fastest growing region for several years at least and the foreseeable future in civil aviation."

Gupte said though air fares are at higher levels due to supply-demand mismatch, there’s high demand. “Certainly high air fares will affect demand at some point, but at this point, demand for air travel is so high supply is unable to keep pace with it, leading to high air fare. It is incumbent on all of us to try and address that demand as rapidly as possible," he said.

While India has two major airlines today in Air India and IndiGo, the market will have opportunities for startup airlines as well, Boeing said.

“While it will take some time for startups to reach scale of two dominant players that you have right now you should not rule out the new players. Indian market is growing so fast that there is always going to be that opportunity for them to take their rightful share over the long term," Gupte said.

The recent entry of Airbus A350 in Air India wide-body order does not bother Boeing and it continues to engage in discussions with current Boeing and non-Boeing customers.

“It doesn’t concern me. Boeing has been and will continue to be the dominant provider of wide-body to India. There have always bene wide-body planes from our competitor in India just not as many as Boeing," he said.

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Published: 03 Jul 2023, 05:39 PM IST
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