Can India Challenge the Dominance of Airbus and Boeing in the Aviation Industry?

Published On Tue, 11 Jun 2024
kartik kumar
Narrow Opportunity for New Entrants: The window for new competitors in the commercial aircraft market may be too limited, as Airbus and Boeing are expected to recover within a few years, a timeline insufficient for any new entrant to develop a competitive aircraft program. Currently, both companies are struggling with delivery delays due to external supply chain issues, with Boeing also facing internal problems. This situation has led to speculation about China potentially joining the duopoly, transforming it into a triopoly in the single-aisle jet market.
India’s Manufacturing Ambitions : Similar to China, India aims to boost its manufacturing sector. While China is shifting towards a service-oriented economy, India, which surpassed China in population in April according to the United Nations, is focusing on attracting manufacturers to set up factories, creating jobs for its rapidly growing population. The Make in India initiative, launched by Prime Minister Narendra Modi in September 2014, exemplifies this effort. The Indian Ministry of External Affairs highlighted that the initiative seeks to integrate India into the global supply chain by encouraging foreign direct investment in sectors like defense, railways, and construction.
Aircraft Demand and Economic Growth: Increasing local manufacturing has a clear benefit: job creation. Job growth leads to higher earnings, which can boost consumer spending on non-essentials like travel. India is predicted to become the worlds largest aviation market. The International Air Transport Association (IATA) projects that Asia-Pacific will experience the fastest passenger growth at 4.5% annually from 2019 to 2040, with India contributing significantly with a 6% annual growth rate.
Expanding Production Capabilities : To meet rising demand, aircraft manufacturers will need to expand production. Airbus and Boeing have already established operations in China. Airbus has an assembly line and a widebody completion center in Tianjin and is building a second line to be operational by late 2025. Boeing operates a 737 Completion Delivery Center in Zhoushan but has faced challenges due to the US-China Trade War.
Indias Minister of Civil Aviation, Jyotiraditya Scindia, has called for Airbus and Boeing to set up assembly lines in India, highlighting the market potential, volume, and engineering talent available. Airbus, in collaboration with Tata Advanced Systems Limited, is building an assembly line for the C295 aircraft, set to be operational by November 2024, with deliveries starting in 2026.
Competitive Advantage and Future Prospects : India’s competitive edge lies in its low production costs, resource availability, and supportive regulations, as noted by the All India Association of Industries (AIAI). Airbus plans to purchase $1.5 billion worth of parts from India, and Boeing has opened its Boeing India Engineering Technology Centre (BIETC) in Bangalore.
Prime Minister Modi expressed optimism that India could eventually design a future aircraft. However, developing a new supply chain is complex, as demonstrated by China’s COMAC and Japan’s Mitsubishi, which faced significant delays and financial losses in their aircraft programs.
While Airbus and Boeings supply chain issues may not persist long-term, new technologies and sustainable propulsion solutions could offer opportunities for emerging technological clusters to contribute to major programs led by experienced entities. National pride and political rhetoric might also drive India to attempt designing and building its own commercial aircraft in the future.
Disclaimer: This image is taken from Aerospace Trek.
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