SOURCE: IDRW.ORG TEAM.
Airbus and Boeing are caught in a strategic tug-of-war with the Indian government. As India’s commercial aviation market experiences explosive growth, both companies are under pressure to establish final assembly lines (FAL) within the country.
India is projected to need over 2,000 short-Mediumhaul aircraft in the next two decades, making it a lucrative market neither Airbus nor Boeing can afford to ignore. However, the Indian government desires more than just sales. They want a bigger piece of the pie – a local FAL that fosters domestic manufacturing and technological expertise.
While both giants have increased sourcing from Indian companies for their global supply chains, this hasn’t satiated the government’s appetite. Sensing an opportunity, smaller players like Sukhoi and Embraer have expressed interest in setting up FALs for their short-Medium haul jets, dangling incentives for Indian airlines and government support.
Airbus and Boeing are keenly aware of this emerging competition. They are actively considering establishing local FALs, understanding that billion-dollar deals with Indian carriers could be jeopardized if they lose the first-mover advantage. Sukhoi or Embraer, backed by government tax breaks, could significantly undercut their pricing.
Adding another layer of complexity is India’s own National Aerospace Laboratories (NAL) proposing the RTA-90, a regional jet for short-Medium haul operations. If approved, the government could exert pressure on domestic airlines to prioritize locally manufactured jets over established giants like Airbus and Boeing.
The situation presents a strategic tightrope for Airbus and Boeing. They must balance their global production strategies with the growing demands of the Indian market. Establishing FALs could offer long-term benefits in terms of market access and fostering closer ties with India’s burgeoning aerospace industry. However, initial investments and potential production line disruptions are significant considerations.
The coming months will be crucial. How Airbus and Boeing navigate this situation will determine their future market share in India’s booming aviation sector.
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