Despite India's rapidly growing aviation market and strong government pressure, aerospace giants Airbus and Boeing are showing significant reluctance to establish Final Assembly Lines (FALs) within the country.
This hesitancy is reportedly rooted in a desire to protect their existing manufacturing bases and, crucially, to avoid fostering a potential Indian competitor, mirroring their experience with China's COMAC.
India is projected to require nearly 2,000 new aircraft over the next two decades, making it a highly valuable market for both Airbus and Boeing. The Indian government, under its "Make in India" initiatives, has been actively encouraging the establishment of FALs to boost domestic manufacturing, create jobs, and facilitate technology transfer. The Ministry of Civil Aviation has emphasized the importance of local manufacturing as a key component of large aircraft orders.
However, according to industry insiders, including a former Airbus India employee, both companies are prioritizing the strengthening of their existing facilities in their home countries (France for Airbus, and the United States for Boeing) over establishing a major manufacturing presence in India. The insider stated that despite any volume of orders from Indian airlines, neither company intends to create a full FAL in the country.
This position prioritizes maintaining production at established facilities in locations like Toulouse (France), Hamburg (Germany), and Seattle (USA). While both companies have publicly entertained the possibility of an Indian FAL to appease government officials, their actions indicate a focus on maintaining their current manufacturing footprint. The underlying strategy appears to be treating India primarily as a major customer, rather than a full manufacturing partner.
A significant factor contributing to this reluctance is Airbus's experience in China. In 2008, Airbus established an FAL in Tianjin, China, for A320-family aircraft, largely in response to Chinese government pressure and market growth.
While this facility has been productive, delivering over 600 aircraft, it is also believed to have inadvertently contributed to the rise of the Commercial Aircraft Corporation of China (COMAC) and its C919 aircraft.
The C919, a narrow-body jet, is now a direct competitor to both the Airbus A320 and Boeing 737 families. COMAC has reportedly received over 1,000 orders for C919 within China.
The former Airbus employee explicitly stated that both Airbus and Boeing are wary of repeating this scenario in India. They fear that an Indian FAL could accelerate the development of a domestic Indian aircraft manufacturer, potentially challenging their market dominance in the long run. This potential competitor could emerge from existing entities like Hindustan Aeronautics Limited (HAL) or from a new private sector player.
However, the differing market conditions between China and India also play a role. China's more controlled market and assertive industrial policies gave Airbus less room to negotiate, necessitating the Tianjin FAL for market access. On the other hand, India's more open and democratic system, allows Airbus and Boeing to exert more leverage, relying on their technological advantages and established global supply chains.
While both companies have increased their engagement with Indian suppliers – Airbus, for example, sources approximately $1 billion worth of components from India annually, and Boeing has partnerships with companies like Tata Advanced Systems – the absence of a full FAL significantly limits the scope of technology transfer and the creation of high-skilled aerospace jobs within India.
Major aircraft orders, such as IndiGo's 2023 order for 500 Airbus A320neo family aircraft and Air India's order for 470 aircraft (split between Airbus and Boeing) in the same year, have not included firm commitments for establishing FALs, despite public statements from Indian officials suggesting otherwise.
Some analysts argue that this approach by Airbus and Boeing is short-sighted, potentially jeopardizing their long-term relationship with a crucial growth market. However, the companies appear to be prioritizing the protection of their core intellectual property and established manufacturing bases over the potential benefits of a closer industrial partnership with India.
