India urges Airbus and Boeing to set up jet assembly plants in the country.

India’s civil aviation minister, Jyotiraditya Scindia, has urged Airbus and Boeing to establish aircraft assembly plants in the country to meet the growing demand for jets and boost the local aeronautical industry. Scindia emphasized that the conditions are favorable for a “leap of faith” by the two companies and pointed out the recent plans to assemble Airbus C295 military transport planes in India as evidence of the country’s readiness for such a move.

India’s civil aviation minister, Jyotiraditya Scindia, has strongly urged Airbus and Boeing to establish aircraft assembly plants in India, citing Airbus’s recent decision to assemble C295 military transport planes in the country as a positive example. Scindia emphasized the need for a “capital A” effort from the companies, but Airbus and Boeing have downplayed the importance of passenger jet assembly, instead emphasizing their existing investments in India’s technology and manufacturing sectors.

A consortium between Airbus and Tata has announced plans to assemble 40 C295 planes in Gujarat, the home state of India’s Prime Minister Narendra Modi. The move is part of Modi’s “Make in India” initiative, which aims to expand the country’s economy by making aerospace and defense a key engine of growth.

Tata-controlled Air India last month agreed record orders for 470 jetliners from Airbus and Boeing and sources have said India’s largest airline, IndiGo, is in talks for another 500.

“The market is there, the volume is there, the engineering talent is there. And then you take that leap of faith. So the time has come now,” Scindia said in an interview, adding such decisions would not necessarily be tied to specific jet orders.

“Now is the time for these companies to look at planting their feet on the ground in India,” he said.

India has been advocating for aircraft assembly in the country for several years but has intensified its efforts over the past year, according to two sources familiar with the matter. This comes as Airbus and Boeing face the challenge of meeting increasing demand for planes while also dealing with global supply chain issues and geopolitical tensions.

Boeing and Airbus have different strategies for production, with Boeing keeping the benchmark 737 production in the Seattle area, while Airbus operates four competing A320 production lines in Europe, the United States, and China.

EXISTING INVESTMENTS

Currently, both Boeing and Airbus seem to have resisted India’s requests for final assembly lines (FAL) for passenger jets, instead emphasizing their existing investments in engineering, supply chain, and maintenance in India. Boeing stated that it purchases $1 billion worth of parts and services annually from India, while Airbus reported purchases of $700 million. India’s restrictions limit local assembly to defense projects, where national security concerns can be incorporated into the cost.Currently, both Boeing and Airbus seem to have resisted India’s requests for final assembly lines (FAL) for passenger jets, instead emphasizing their existing investments in engineering, supply chain, and maintenance in India. Boeing stated that it purchases $1 billion worth of parts and services annually from India, while Airbus reported purchases of $700 million. India’s restrictions limit local assembly to defense projects, where national security concerns can be incorporated into the cost.

There’s a desire in every country to have as much manufacturing as possible … and final assembly is a desire that you see all around the world,” Salil Gupte, president of Boeing India, told Reuters.

“The volumes that you would require for final assembly on the commercial part of the business are just far, far greater,” he said.

A final decision comes down to the business case, and Boeing is always looking at opportunities to do more in India, he added.

Boeing has announced plans to convert 737 passenger planes into dedicated freighters at a plant in Hyderabad, while both Boeing and Airbus have engineering plants and numerous employees in India. Airbus India & South Asia President Remi Maillard noted that Airbus’s existing industrial footprint in India already generates significant foreign exchange value and employment opportunities for the country, even without the C295 FAL. However, Scindia emphasized that a supportive ecosystem would give planemakers the confidence to establish assembly plants in India in the future.

Aerospace analysts say assembly represents just 5% to 7% of a plane’s value, yet is often seen as a political win. Source