SUMMARY
Indian government plans to make the country a hub for aircraft maintenance, repair and overhaul
India was recently linked to the Boeing 737 Max software fleet controversy.
The government has proposed to hike FDI limit in domestic air carriers from the existing 49%
A day after the Union Budget 2019 outlined plans for developing India as a hub for aircraft repair and maintenance, NITI Aayog CEO Amitabh Kant, in a tweet highlighted how a top global aircraft manufacturer now sources major ingredients for its jets from India under its ‘Make In India’ partnerships.
“Every commercial Airbus aircraft being produced today has a major ingredient of “Make in India”. Airbus has more than 45 Indian suppliers in the supply chain and uses Indian talent for design, engineering and research,” Kant tweeted.
The announcement comes a day after finance minister Nirmala Sitharaman in her budget speech said that the government will leverage India’s engineering advantage and potential to achieve self-reliance in the aviation segment by adopting suitable policy interventions for the development of the industry.
The timing of the announcement and tweet comes at a time when India was recently linked to the Boeing 737 Max software fleet controversy.
US aircraft maker Boeing has run into rough weather of late after two of its 737 Max jets crashed, in a span of less than 6 months, causing the loss of 346 lives.
The reasons for the mishap are still being investigated and the company has rolled out a fix but a Bloomberg article titled “Boeing’s 737 Max Software Outsourced to $9-an-hour Engineers” last week caused an uproar in India, as the article quoted some of Boeing’s former engineers who linked the software malfunction to quality issue arising from Boeing resorting to using outsourced work from India to cut costs.
Boeing, however, completely refuted the allegation, saying it did not rely on engineers from these companies for the Maneuvering Characteristics Augmentation (MCA) System.
HCL said it had a strong and long-standing business relationship with the Boeing but said it is not associated with any ongoing issues with 737 Max and similarly, Cyient also refuted the claim.
Helping India’s Aerospace Industry Takeoff
In the Union Budget announced yesterday, the government has proposed to hike the foreign direct investment ( FDI) limit in domestic air carriers from the existing 49%. “The government will examine suggestions of further opening up of FDI in aviation, media (animation, AVGC) and insurance sectors in consultation with all stakeholders,” Sitharaman said.
This move will help troubled airlines such as Air India and Jet Airways find buyers, with the latter having grounded its planes since 18 April due to a severe fund crunch
“As the world’s third-largest domestic aviation market, the time is ripe for India to enter into aircraft financing and leasing activities from Indian shores. This is critical to the development of self-reliant aviation industry, creating aspirational jobs in aviation finance, besides leveraging the business opportunities available in India’s financial special economic zones (SEZs), namely, International Financial Services Centre (IFSC),” Sitharaman said in her budget speech.
India is traditionally looked like a market which does not have too much sophistication when its comes to the aerospace industry but with the country being the world’s fastest-growing aviation market last year, it can use the tailwind to up its capacity.
Globally, the demand for new aircraft has increased phenomenally. Commercial aircraft sector is expected to see a growth rate of 4.8% in FY2018-19.
