India-U.S. trade deal seen boosting aerospace sourcing, aircraft orders

Global aerospace manufacturers are closely examining the fine print of the India-U.S. trade agreement as they seek a larger share of the world’s fastest-growing aviation market, according to people familiar with the matter.

The agreement provides for zero-duty access on aerospace components exported from India to the United States, placing India on par with supply chains in Europe, Japan and South Korea.

While operational clarity is expected in the coming days, officials said the move could lead to an “exponential” rise in India’s aerospace exports, currently estimated at about $1.5 billion annually for Airbus and $1.25 billion for Boeing.


Boeing has indicated it will double its sourcing from India, officials said, with Commerce and Industry Minister Piyush Goyal stating that India is expected to emerge as one of the company’s largest overseas component suppliers in the coming years. The deal also includes a reduction in tariffs on aerospace products from 50% to 18%, which officials said would provide significant relief to the domestic supply chain.

The tariff cut could also support additional aircraft orders from Indian carriers. Boeing currently has orders worth about $50 billion from airlines including the Air India Group and Akasa. Sources said IndiGo is expected to place a large order for wide-body aircraft, which Boeing is closely tracking, and the company expects further orders from India worth “tens of billions of dollars” in the coming years.

Boeing India and South Asia President Salil Gupte said the agreement opens up “multifold opportunities” and could accelerate bilateral trade and economic engagement. Government officials estimate Indian airlines, led by Air India and IndiGo, may place aircraft, engine and spares orders worth $70–80 billion.

With Indian carriers being privately owned and not subject to offset requirements, officials said the government’s ‘Make in India’ policy has nevertheless prompted aircraft manufacturers to increase sourcing from India. India expects Boeing to at least double its procurement from Indian suppliers as fresh orders are placed, officials added.

(With inputs from TOI)