Indo-US Trade Deal Set to Transform India's Aerospace Sector
In a strategic move to capture a larger share of the world's fastest-growing aviation market, major aerospace original equipment manufacturers (OEMs) are meticulously reviewing the details of a groundbreaking Indo-US trade agreement. This deal is poised to significantly enhance India's position in the global aerospace supply chain.
Zero-Duty Access to Boost Exports Exponentially
The agreement grants zero-duty access for components exported from India to the United States, placing India on par with established aerospace hubs like Europe, Japan, and Korea. While final clarity is anticipated within a week, this tariff elimination is expected to drive an exponential increase in aerospace exports from India.
Currently, India's aerospace exports stand at approximately $1.5 billion annually for Airbus and $1.25 billion for Boeing. Officials have revealed that Boeing has already signaled its intention to double component sourcing from India. Commerce and Industry Minister Piyush Goyal has confidently stated that India is set to become one of the largest foreign component suppliers in the coming years.
Tariff Reductions and Mega Orders on the Horizon
In addition to zero-duty access, the deal includes a reduction in tariffs from 50% to 18%, offering substantial relief to India's expanding aerospace supply chain. This favorable environment is likely to translate into massive orders for American aerospace giants.
Boeing, in particular, is positioned to benefit significantly. The company already has orders worth $50 billion for hundreds of wide-body and narrow-body planes from the Air India Group and Akasa. Sources indicate that IndiGo is expected to place a mega order for wide-body aircraft, a prospect Boeing is closely monitoring.
Boeing alone anticipates orders valued at tens of billions of dollars from India in the near future. Salil Gupte, President of Boeing India and South Asia, emphasized the deal's potential, stating, "The US-India trade agreement opens up multifold opportunities, and we are excited by its potential to accelerate bilateral trade and economic relations between the two countries."
Government Initiatives Driving Growth
Government officials have projected that Indian carriers, led by Air India and IndiGo, are likely to place orders totaling $70-80 billion for aircraft, engines, and spares. Despite these being private companies with no offset requirements for OEMs, the Modi government's 'Make in India' policy has incentivized increased sourcing from India.
As a result, India expects Boeing to at least double its sourcing from the country, leveraging the new orders anticipated under this enhanced trade framework. This development underscores India's growing influence in the global aerospace industry and its strategic partnership with the United States.
