India-US trade framework to accelerate aviation growth, says Boeing India chief

What Happened

• The India-US trade framework announced in early February 2026 includes significant provisions for the aviation sector: tariff relief on aircraft and aircraft parts, expanded Boeing supply chain sourcing from India, and a pathway for India to become a major aerospace manufacturing hub.
• Boeing India's chief executive stated that the trade framework would "accelerate aviation growth" by making aircraft parts and finished aircraft more cost-competitive for Indian airlines, while positioning India as a Tier-1 aerospace supplier.
• India signalled readiness to place Boeing orders worth $70-80 billion (potentially exceeding $100 billion including engines and services) — making it potentially the largest single Boeing order in the aircraft manufacturer's history.
• The US committed to removing tariffs on certain Indian aircraft and aircraft parts imposed under national security-related proclamations related to aluminium, steel, and copper.
• Policy tailwinds — including the government's $4 billion MRO hub target by 2030, the UDAN scheme, and 100% FDI in aviation — position India to leverage the trade framework for domestic aerospace industrial development.

Static Topic Bridges

India's Civil Aviation Sector: Growth Trajectory and Policy Framework

India is the world's third-largest domestic aviation market and is projected to become the largest by 2030-2040. Indian carriers operated approximately 750 aircraft in 2024 and are expected to operate over 2,000 aircraft within a decade — driven by rising middle-class incomes, UDAN-enabled regional connectivity, and the massive capacity expansions underway at IndiGo, Air India (now Tata-owned), and Akasa Air.

The policy framework enabling this growth includes: 100% FDI in greenfield airports and airlines (except for scheduled air transport services, where 49% FDI for foreign airlines); the UDAN (Ude Desh ka Aam Nagrik) scheme for regional connectivity; liberalised Maintenance, Repair and Overhaul (MRO) GST policy (reduced from 18% to 5%); and the National Civil Aviation Policy (NCAP) 2016.

MRO Sector: India's Strategic Aerospace Hub Ambition

The Maintenance, Repair and Overhaul (MRO) sector encompasses the servicing, inspection, and overhaul of aircraft, engines, and components. Globally, the MRO market is worth approximately $100 billion annually. India's MRO sector has historically been underdeveloped — the majority of Indian aircraft are maintained in Singapore, Sri Lanka, Malaysia, and the Middle East — due to high GST rates on MRO services (previously 18%) and the high cost of imported spare parts.

Policy reforms have begun to change this. GST on aircraft MRO was reduced from 18% to 5% in 2020. The Customs Act was amended to allow duty-free import of parts for MRO services. Prime Minister Modi publicly set a target of making India a $4 billion MRO hub by 2030. Major global players are responding: Safran opened a ₹1,300 crore (~$145 million) LEAP engine MRO facility in Hyderabad in November 2025.

The India-US trade framework's tariff relief on aircraft parts directly supports the MRO hub ambition by making spare parts cheaper — the single largest cost component in MRO operations.

Aerospace Manufacturing: India's Emerging Supply Chain Role

India's aerospace manufacturing sector has grown from a ~$250 million annual output a decade ago to approximately $2 billion in 2025. This growth has been driven by the expansion of HAL (Hindustan Aeronautics Limited), private-sector aerospace OEMs, and Tier-1 suppliers like Aequs Ltd, Tata Advanced Systems, and Mahindra Defence Systems.

Boeing has been one of the most active aerospace companies building India's supply chain. Its sourcing from India already covers flight computer parts, aerostructures, and cabin components. The company has committed to doubling its India sourcing from ~$1 billion to ~$2 billion annually, and the trade framework is designed to deepen this integration by removing tariff barriers that currently raise the cost of exporting Indian aerospace components to the US.

India-US Trade Framework: Structure and Strategic Significance

The India-US trade framework (February 2026) represents the first significant step toward a Bilateral Trade Agreement (BTA) between the two countries, negotiations for which had stalled repeatedly since 2019. The interim framework covers five key sectors: energy (India committed to purchase $500 billion of US energy over five years), aviation (Boeing aircraft and parts), agriculture (US access to Indian market), pharmaceuticals (IPR commitments), and technology (semiconductor and ICT).

For India, the framework addresses the Trump administration's threat of reciprocal tariffs (India faced a potential 26% tariff on all goods under the "reciprocal tariff" policy announced in 2025). By proactively committing to major US purchases, India pre-empted tariff escalation and secured aviation-sector benefits.

Key Facts & Data

• India Boeing order signals: $70-80 billion in aircraft; $100+ billion including engines and services
• Boeing's India sourcing (2024): ~$1 billion/year; committed to double to ~$2 billion
• India MRO market target: $4 billion by 2030 (PM Modi's stated goal)
• UDAN Scheme: 766 sanctioned routes; 274 operational; 45 airports connected; 15 million passengers benefited
• India domestic aviation market: ~150 million passengers/year; projected 500 million by 2040
• India's aircraft fleet: ~750 commercial aircraft (2024); projected 2,300+ by 2040
• India's aerospace exports: ~$2 billion annually (2025); target $5 billion
• GST on MRO services: reduced from 18% to 5% (2020)
• Safran Hyderabad LEAP engine MRO facility: ₹1,300 crore investment (opened November 2025)
• US tariff removed: aircraft and aircraft parts tariffs under national security proclamations (aluminium/steel/copper)
• India-US trade (2024): ~$190 billion; India's surplus ~$45 billion