Boeing is exploring the possibility of establishing a final assembly line (FAL) in India, as the country’s Prime Minister, Narendra Modi, recently visited the United States, laying the foundation for engine manufacturing within India.
Salil Gupte, President of Boeing India, informed TOI the US aerospace giant intends to increase its sourcing from India, which currently amounts to $1 billion annually.
Over the past four months, Boeing and Airbus have secured firm orders for 970 aircraft worth $120 billion from Air India and IndiGo.
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Additionally, IndiGo, which has leased two Boeing 777s from Turkish Airlines, may place a significant order for wide-body aircraft with Boeing.
Gupte said: “We are looking at the business case for that (having a final assembly line in India)… focused on increasing sourcing that leads up to that – for components, higher value systems and parts of aircraft.
“FAL is relatively small in the overall value chain of an aeroplane, unlike say smartphones or electronics where a lot of value is added in the final step.
“It is critical but (represents) less than 10% of the overall value of an aircraft.
“Over time, as the demand grows in India and for the region, we will evaluate the business case for a FAL.”
Boeing currently sources over $1 billion (Rs 8,200 crore) annually from India, with approximately two-thirds of that amount attributed to manufacturing.
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This makes Boeing the largest importer of original equipment manufacturing (OEM) goods from India.
Over the past 18-24 months, Boeing has signed contracts worth an additional $1 billion, with the sourcing from India, set to witness significant growth in the next two to three years.
Gupte said: “We have been at the $1-billion level of sourcing from India for the last two-three years. During this pandemic time, aeroplane production rates went down significantly.
“While globally sourcing dropped in that period, in India it stayed flat at a billion dollars. So, you can imagine how fast the growth here was even when aircraft production rates were lower.
“Now as those rates increase, India will ride that wave up,”
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India, being the world’s fastest-growing aviation market, is eager to have both Boeing and Airbus establish final assembly lines in the country.
With Prime Minister Modi’s efforts, India is developing an ecosystem conducive to the defense sector.
Tata and Airbus had previously joined forces to manufacture the C-295 transport aircraft for the Indian Air Force in Gujarat. During Modi’s recent state visit to Washington, GE Aerospace, a major US company, signed an agreement to co-produce fighter jet engines in India.
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These defense aviation ecosystems and supply chains will lay the foundation for civil manufacturing and final assembly lines.
Gupte said: “The announcement for co-production of military engines in India made during PM Modi’s Washington visit by GE is a big step forward.
“That certainly laid the groundwork for engine manufacturing in India. That’s a great step forward.”
CFM International, GE’s joint venture with French Safran, is a leading supplier of engines for single-aisle aircraft, including the Boeing 737 MAX and the Airbus A320neo family.
During Prime Minister Narendra Modi’s recent state visit to the US, Boeing pledged a $100 million investment in India.
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Boeing India president Salil Gupte said: “The India market is growing so fast that it will need tens of thousands of pilots over the next 20 years. That means there has to be the required training infrastructure in India.
Many students currently go out of India for pilot training and for simulator sessions. We want as much as possible of that to be done in India.
“Much of our announced $100-million investment will go towards the simulator infra, software to support sims and on developing curriculum for training.
“We will certainly have our involvement in this, but much of that investment will be done via our partnership with CAE. Some of the investment will happen with Air India as they get into training themselves as well.”
