SOURCE: IDRW.ORG
India, one of the world’s fastest-growing aviation markets, is poised to order nearly 2,000 aircraft over the next two decades, presenting a lucrative opportunity for global aerospace giants Airbus and Boeing. However, despite intense pressure from the Indian government to establish local Final Assembly Lines (FALs) as part of the ‘Make in India’ initiative, both companies have steadfastly resisted committing to such investments.
According to insights shared with Indian Defence Research Wing (idrw.org) by a former Airbus India employee, this reluctance stems from strategic priorities and lessons learned from past experiences, notably in China.
The Indian aviation sector’s rapid expansion, driven by rising demand for air travel and ambitious fleet expansions by carriers like IndiGo, Air India, and others, has made it a critical market for Airbus and Boeing. Yet, the former Airbus employee revealed a blunt reality: “No matter what orders Indian airline companies place, they won’t start a local FAL in the country.” While both companies have dangled the prospect of considering an FAL to appease Indian authorities, their focus remains on bolstering facilities in their home countries—France and the U.S., respectively—to preserve jobs and industrial capacity there.
The Indian government has long pushed for Airbus and Boeing to establish FALs in India, envisioning a boost to domestic manufacturing, job creation, and technology transfer. Such a move would align with the ‘Aatmanirbhar Bharat’ (self-reliant India) agenda, potentially positioning India as a global aerospace hub. However, the companies’ resistance reflects a calculated strategy to safeguard their long-term interests.
“They promise they will think about an FAL, but they won’t,” the former Airbus employee told idrw.org. “Both Airbus and Boeing are keen to put more resources in their country of origin to keep their current facilities intact.” This approach prioritizes maintaining production lines in Toulouse, Hamburg, and Seattle over dispersing resources to new markets, even one as promising as India. The employee pointed out that the companies see India primarily as a customer rather than a manufacturing partner, despite the massive order potential.
A key reason for this reluctance, according to the source, is Airbus’s experience in China. In 2008, Airbus opened an FAL in Tianjin to assemble A320-family aircraft, a decision driven by China’s growing market and government pressure. While the facility has produced over 600 aircraft and secured Airbus a foothold in China, it inadvertently fueled the rise of a domestic competitor: the Commercial Aircraft Corporation of China (COMAC) C919. The C919, a narrow-body jet similar in size to the Airbus A320 and Boeing 737, has emerged as a direct rival, leveraging technology and expertise gained partly through China’s exposure to Airbus’s operations.
“Airbus has learned its lessons from the China experience,” the former employee explained. “The COMAC C919 is now a competitor to both the A320 and the Boeing 737. Airbus and Boeing don’t want any local competition coming up from India for its Indian market, so they are resisting any pressure to start a local FAL.” The fear is that an Indian FAL could pave the way for a homegrown manufacturer—perhaps Hindustan Aeronautics Limited (HAL) or a private player—to develop a competing aircraft, threatening their dominance in one of the world’s most lucrative markets.
When idrw.org pressed the source on why Airbus established a plant in China despite fewer initial orders compared to India’s projected demand, the response pointed to differing strategic contexts. China’s tightly controlled market and assertive industrial policies left Airbus little choice but to comply to secure access. In contrast, India’s open market and democratic framework allow Airbus and Boeing to negotiate from a stronger position, leveraging their technological superiority and global supply chains without committing to local assembly.
Moreover, China’s state-backed aviation ambitions contrast with India’s nascent aerospace ecosystem, which lacks the immediate capacity to replicate the C919’s success. Airbus and Boeing appear to be banking on this disparity, believing they can maintain market control in India without risking the rise of a domestic rival through an FAL.
The refusal to establish FALs poses a challenge to India’s goal of becoming a self-reliant aerospace power. While Airbus and Boeing have deepened ties with Indian suppliers—Airbus sources components worth $1 billion annually from India, and Boeing collaborates with firms like Tata Advanced Systems—the absence of a full-fledged assembly line limits technology transfer and high-skill job creation. Indian airlines, meanwhile, remain dependent on foreign deliveries, with lead times stretching years amid global supply chain constraints.
The government has floated incentives and threatened to tie large orders to local manufacturing commitments, but Airbus and Boeing’s entrenched positions suggest these efforts have yet to yield results. For instance, IndiGo’s order of 500 A320neo-family aircraft in 2023 and Air India’s 470-plane deal (split between Airbus and Boeing) in the same year came with no firm FAL promises, despite public rhetoric from Indian officials.
Critics argue that Airbus and Boeing are shortsighted, potentially alienating a key market by ignoring India’s industrial aspirations. Establishing an FAL could lock in their dominance, preempt competition, and tap into India’s cost-competitive labor pool. Yet, the companies’ calculus prioritizes protecting their core operations and intellectual property over long-term market goodwill.
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