Boeing Unfazed by India-EU Trade Deal, Sees No Major MRO Cost Cuts
The recently concluded free trade agreement between India and the European Union has generated significant discussion within aviation circles. While the pact eliminates tariffs on aircraft and spacecraft components, American aircraft manufacturer Boeing remains skeptical about substantial cost reductions for maintenance operations in India.
Limited Impact on Maintenance Costs
Salil Gupte, president of Boeing India and South Asia, explained the company's perspective during an interview at Wings India 2026 in Hyderabad. "The reality is that the duties were already capped at 5% for most parts coming in for MRO and repair maintenance purposes already, by the government," Gupte stated. "So, I'm not sure whether that reduction necessarily matters from an MRO standpoint."
This position stems from India's existing policy framework that had already limited import taxes on most aircraft components to 5%. The India-EU FTA, while eliminating tariffs on numerous aviation products including engines, avionics, landing gear, and maintenance inputs, offers only marginal advantages to European spare parts suppliers operating in the Indian market.
Airbus Gains and Production Focus
While Boeing anticipates minimal impact, its European rival Airbus might benefit marginally from the trade agreement. Under the FTA, import duties on civil aircraft and related parts—currently at 11% in some categories—will be phased down over several years. This could theoretically lower acquisition costs for European-made aircraft and components, potentially strengthening Airbus's pricing position in India.
Jürgen Westermeier, president and managing director for India and South Asia at Airbus, confirmed "no impact on aircraft and component procurement prices" from the company's perspective, noting "zero tariff for line for line items."
Gupte acknowledged that the FTA might matter more for specific projects like Airbus's C295 final assembly line in Vadodara. This facility, operated by Tata Advanced Systems Ltd and Airbus, assembles 40 C295 tactical transport aircraft for the Indian Air Force, with the first "Made in India" unit scheduled for 2026.
Production Ramp-Up and Market Dynamics
Rather than focusing on tariff reductions, Boeing is concentrating on increasing aircraft deliveries to meet India's growing aviation demand. The company has significantly ramped up production at its US facilities, with narrow-body aircraft output rising to 42 per month from 38, and set to increase further to 47 soon. Wide-body aircraft production will also increase to 10 per month from the current seven.
"On average, you can expect, over the next couple years, roughly two aircraft a month," Gupte projected. "And in some months it'll be more, and some months it'll be less, and some months there'll be a wide-body aircraft in there as well."
This production increase will help Indian carriers like the Air India group and Akasa Air scale up their fleets. Air India plans to induct a new wide-body aircraft every six weeks in 2026 and 2027, alongside refurbishing its legacy Boeing fleet.
Long-Term Market Projections
Boeing estimates that approximately 3,300 aircraft will enter the Indian and South Asian market over a 20-year period. "That is roughly a quadrupling of the Indian fleet over that period as well," Gupte noted. "So, some of those aircraft will be for replacement. Many of those aircraft will be for growth, naturally."
Currently, IndiGo maintains India's largest fleet with 440 aircraft, followed by the Air India Group's 297 aircraft and Akasa's 32 aircraft. Indian carriers have placed orders for nearly 1,000 jets between Boeing and Airbus.
Infrastructure Investments and Manufacturing Strategy
To support this anticipated growth, Boeing has been investing heavily in training infrastructure within India. "We made $100 million investment in simulator capacity over the past year and a half or so," Gupte revealed, noting that simulators for both 737 MAX and 787 aircraft have been inducted in India.
The company is also focused on building domestic maintenance and repair capacity. "We also need significant maintenance. And so we've been involved with our airline customers on maintenance training capability in India," he explained, pointing to initiatives like Safran's engine shop for the CFM LEAP engine in Hyderabad as examples of developing domestic MRO ecosystems.
However, Boeing has no immediate plans to establish a final assembly line in India. Gupte downplayed the strategic importance of final assembly alone, noting that "final assembly is about 7% of the value chain." Instead, the company emphasizes component manufacturing and advanced materials, with Boeing's supplier base in India now including over 300 firms.
"There's the other 93% that many of us, ourselves, Airbus, Lockheed, have been focused on developing here in India," Gupte concluded, highlighting that these elements matter far more than assembly lines in determining long-term competitiveness in the aviation sector.
