Indo-US Trade Deal Poised to Double Boeing Sourcing from Indian Aviation Suppliers

A landmark Indo-US trade deal is set to reshape the global aerospace supply chain. The agreement grants zero-duty access for Indian-exported components to the United States. This move is expected to cause an "exponential" rise in aircraft component exports from India.

Legal teams for major Original Equipment Manufacturers (OEMs) are reviewing the fine print. The deal gives India parity with established aerospace supply chains like Europe, Japan, and Korea. This strategic shift supports the Modi government’s 'Make in India' policy.

The Zero-Duty Advantage

The zero-duty access is a major commercial incentive for Indian suppliers. It removes certain US tariffs on Indian aircraft and aircraft parts. This includes tariffs previously imposed on materials like aluminum and steel.

For the broader aerospace supply chain, a tariff cut is also expected. Tariffs on certain parts are reportedly dropping from 50% to 18%. This significant relief enhances cost competitiveness for Indian firms. Industry leaders believe this will strengthen the operating environment for local suppliers.

Manufacturer Commitments and Sourcing Growth

Aerospace giants are already major buyers in the Indian aviation market. Boeing currently sources over $1.25 billion annually from more than 300 Indian suppliers. Airbus sourcing is currently around $1.4 billion.

Officials report that Boeing has indicated plans to double its sourcing from India. This is driven by the new trade environment and massive new orders. Commerce and Industry Minister Piyush Goyal asserted India will become a major foreign component supplier. Airbus also aims to increase its annual sourcing to $2 billion by 2030.

• Boeing India sourcing is expected to at least double from its current $1.25 billion annual value.
• Airbus targets increasing its sourcing to $2 billion annually by 2030.

Fueling Future Fleet Orders

The trade deal is expected to translate into large aircraft orders for American manufacturers. Boeing already holds orders worth $50 billion from Air India Group and Akasa. The plane maker expects orders worth "tens of billions" from India soon.

Indian carriers, led by Air India Group and IndiGo, are likely to place orders for $70-$80 billion in aircraft, engines, and spares. IndiGo is reportedly considering a wide-body aircraft order, which Boeing is closely watching.

Boeing India and South Asia President Salil Gupte stated the agreement opens "multifold opportunities". It is expected to accelerate bilateral trade and economic relations. The absence of offset requirements for these private airline orders further encourages OEMs to increase local sourcing. This deepens India's integration with US aerospace supply chains.

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