Airbus to double sourcing from India to $1.5 billion as plane orders soar

By Rishika Sadam and Aditi Shah

HYDERABAD, India (Reuters) -Airbus expects to double the total value of parts it sources from India to $1.5 billion in coming years, the planemaker’s India chief said on Thursday, as it looks to ride the boom in the world’s fastest growing aviation market.

Indian carriers IndiGo, Air India and Akasa are set to receive deliveries of hundreds of new planes over the next decade in a boost for local component manufacturers that supply parts to planemakers and engine companies.

Airbus has more than 40 suppliers in India, including Tata Advanced Systems and Mahindra Aerospace, which provide components and services for its commercial and defence aircraft as well as helicopter platforms.

The European planemaker expects to double the company’s sourcing from the country from $750 million at present, Remi Maillard, president of Airbus India and South Asia, said at the “Wings India” event in Hyderabad.

“Global aviation is pivoting to India and we are only seeing the tip of the iceberg,” said Maillard, adding that the Indian aviation supply chain is transforming.

India is the world’s fastest-growing aviation market where the total fleet size of its airlines is set to grow to over 2,000 by 2030 from about 700 today. The government, too, is investing close to $12 billion in building new airports and refurbishing existing ones.

Domestic manufacturers have kept pace and grown their capacities by “leaps and bounds”, Civil Aviation Minister Jyotiraditya Scindia said at the event, adding that aerospace manufacturing is taking strong roots.

“There is not a single aircraft that is produced by Airbus or Boeing internationally today that does not carry a part that is made in India,” Scindia added.

With the two planemakers now sourcing all kinds of parts from India, Scindia said “the time is right” for them to look at setting a up final assembly line for planes in the country.

While India has been lobbying quietly for jet assembly for several years, Airbus and Boeing have focused more on increasing sourcing and procurement from the country.

Aerospace analysts say assembly represents just 5% to 7% of a plane’s value, yet is often seen as a political win.

The latest push comes amid large plane orders for Airbus and Boeing. IndiGo placed a record order for 500 Airbus planes last year while Air India has ordered 470 planes split between the two planemakers.

On Thursday, India’s Akasa Air ordered 150 narrowbody planes from Boeing.

(Reporting by Rishika Sadam, writing by Bansari Mayur Kamdar; editing by YP Rajesh and Nick Macfie)