US Tariff Reset on Aircraft Parts Spurs Boeing and Airbus Sourcing in India

The United States and India have finalized an interim trade agreement framework. This deal significantly recalibrates the global aerospace manufacturing landscape. The agreement includes a major provision for the aviation sector. It grants duty-free access for certain Indian aerospace components into the American market.

This US tariff reset is a strategic move. It is designed to deepen bilateral economic engagement. It also supports more resilient, diversified supply chains.

Tariff Reset and Market Access

The interim framework removes US tariffs on specific aircraft and aircraft parts. This includes tariffs previously imposed under Section 232. The overall US tariff on Indian exports is reduced to about 18%. This is down from rates as high as 50% for some products.

This reduction in trade costs makes Indian suppliers more competitive. It strengthens their integration with US aerospace supply chains. Industry leaders noted the tariff lifting will improve cash flows. It will also enhance cost competitiveness for domestic firms.

OEM Expansion Plans

Global Original Equipment Manufacturers (OEMs) are accelerating their engagement. Both Boeing and Airbus see India as a crucial foreign Original Equipment Manufacturer base.

Boeing's Strategic Procurement

Boeing currently sources over $1.25 billion annually from India. The company works with more than 325 Indian suppliers. Boeing intends to double its procurement. It aims to establish India as one of its largest overseas component suppliers. The company's President for India and South Asia welcomed the pact. He said it opens "multifold opportunities."

Airbus's Sourcing Targets

Airbus is also scaling up its operations. It plans to increase its annual sourcing from India to $2 billion by 2030. This is up from its current $1.4 billion. This strategic pivot leverages India’s manufacturing capabilities. It also responds to global supply chain disruptions.

Impact on India's Aviation Market

The trade agreement's benefits extend beyond manufacturing. It directly fuels India's rapidly expanding aviation market. This market is forecast to become the world's third-largest by 2026.

• Lower Operating Costs: The removal of tariffs on aircraft, engines, and key components can lower landed costs. This benefits Indian airlines and maintenance facilities.
• Fleet Modernization: Improved supply-chain predictability supports fleet modernization efforts. It broadens access to OEM ecosystems.
• Major Orders Expected: Government officials estimate Indian carriers may place orders for aircraft, engines, and spares valued between $70 billion and $80 billion in the coming years.

This framework marks a significant step. It moves toward a broader Bilateral Trade Agreement (BTA). It positions India as a key player in the global aerospace supply chain. Continued investment in advanced manufacturing will be crucial. This is needed to fully capitalize on this reconfigured dynamic.

For in-depth airline coverage and commercial aviation news, flying.flights delivers timely industry insights. Get the latest updates on major hubs, regional terminals, and airport operations via the Airports section at flying.flights/airports.