Edition 33
On Thursday, Airbus announced that it has signed an agreement with Bengaluru-based Dynamatic Technologies for the manufacturing and assembly of its A220 family aircraft doors. The contract will support the ramp-up of the A220 programme by creating additional
capacity to the currently existing source. Under the agreement, Dynamatic will manufacture
and assemble the cargo, passenger and service doors along with the over-wing emergency
exit doors for the A220 family aircraft (eight doors per aircraft). This boosts the government’s “Make in India” vision but puts the question back on the “Final Assembly Line” (FAL). Airlines from India placed orders of over 1100 aircraft in the preceding months. China has the Airbus FAL, but India has none.
The desire to have an FAL in India is old. While Airbus expanded, Boeing kept its FAL for the 737s only at a single location. The FAL discussion became public again since Indian carriers placed orders for as many aircraft in the last few months.
While FAL might have a huge emotional value, what may be more important to see is if the total value of assembling the plane is more or supplying parts for assembly is more? And not just the value of the parts but also the jobs they create and the ecosystem they build.
Both Airbus and Boeing have repeatedly talked about India being a strategic market. Early this year, Boeing opened an engineering centre in Bengaluru, its largest such investment outside the United States. Airbus has time and again outsourced work to Indian companies – both public and private. Currently, Airbus’ procurement of components and services from India stands at about US$750 million every year, which will rise to US$1.5 billion in the next few years. Brazilian aircraft maker Embraer signed a MoU with Mahindra group as a precursor to the selection of C-390 by the Indian Air Force.
The FAL might be a big boost but one has to remember that the thousands of parts which get to FAL for the actual assembly would be manufactured across the world. To have an FAL would mean favourable tax policies and speed to get the parts in, without delays and likewise to ship the final product out. Slowly we may be inching towards the readiness of the manufacturing ecosystem but may not be the case on the financial side. Until then, its in everybody’s interest to look beyond FAL.
You can now order Network Thoughts baggage tags and/or book marks!
Follow NetworkThoughts on Twitter, Facebook, Telegram and YouTube.
Extremely vital point raised.