Boeing has stated that a higher volume of aircraft orders from India would be required before considering the installation of a Final Assembly Line (FAL) for commercial aircraft in the country. This position could cool the Indian government's expectations regarding local aircraft manufacturing by the U.S. aerospace giant.
"To justify a final assembly plant in any region, the volume of aircraft must be much higher than what the Indian market currently demands," said Salil Gupte, President of Boeing India and South Asia, in an interview with Reuters during the Aero India event in Bengaluru.
In a statement, Boeing reaffirmed its strong commitment to India's aerospace sector and highlighted its previous offers to assemble defense aircraft, such as the F/A-18 fighter jets, in the country. However, the company noted that the scale required for commercial aircraft production is significantly larger, necessitating a broader regional market to justify the investment.
India’s Push for Local Aircraft Production
Last year, Prime Minister Narendra Modi stated that India would soon have Boeing aircraft designed and manufactured within the country. Additionally, the Civil Aviation Minister declared in 2023 that both Boeing and Airbus should establish production facilities in India.
Currently, Indian airlines, including Air India and IndiGo, have placed orders for approximately 1,800 aircraft from global manufacturers and are expected to receive 130 new aircraft this year, according to Cirium data.
Boeing estimates that over the next two decades, airlines in India and South Asia will add 2,835 commercial aircraft to their fleets, quadrupling the current number. However, Gupte emphasized that final assembly accounts for less than 10% of an aircraft’s total value, with greater profitability derived from other stages of the production chain.
Boeing’s Presence in India
Boeing procures $1.25 billion worth of products and services annually from over 300 suppliers in India and employs approximately 7,000 people in the country. Through its joint venture with Tata Group, the company manufactures AH-64 Apache helicopter fuselages and vertical fin structures for 737 aircraft.
To strengthen India's aerospace supply chain, Gupte noted that the government should offer incentives to suppliers to reduce capital costs. He also mentioned that discussions with the Civil Aviation Ministry have been "frank", and officials have expressed willingness to advance talks with other departments.
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