Boeing aircraft delays, supply chain issues may worsen

The impact of the tariff order from U.S. President Donald Trump could worsen supply chain issues for aerospace manufacturer Boeing, resulting in prolonged aircraft delivery delays for airlines such as Air India Group and Akasa.

“While it is early to gauge the precise impact of the U.S. tariff order, a hike in duties could further compound supply chain challenges raising delivery timelines,” said Sandeep Bahl, senior aviation adviser.

The cost of repairs carried out on spares that are sent by Indian airlines to the U.S. could also increase as their might be a duty on their re-import, Mr. Bahl warned. Currently, these have been negotiated at zero tariff for re-importing by the two countries.

The industry representative also said there might be an opportunity for India too, as original equipment manufacturers could look at minimising the impact and shifting some of manufacturing and repairs here. For example, China was hit by a 34% import duty, in addition to the existing 20%. The import duty on India is at 27%.

Local suppliers of aircraft parts though hoped the hit on them would be minimal as the U.S. tariffs were retaliatory, and India imposed only 0% to 3% import duty on aircraft. “The U.S. tariff announcements necessitate a thorough examination of their consequences for the aviation industry. It’s important to recognise that these are retaliatory measures. In contrast, India demonstrates accommodation by applying a zero percent import duty on defense aviation, specifically for government-to-government contracts. Furthermore, the commercial aviation sector in India benefits from a low 3% import duty,” Udayant Malhoutra, CEO Dynamatic Technologies told The Hindu. He said he expected the issues to be ironed out bilaterally. Punitive tariffs by any party are cost accretive and will put pressure on industries and result in loss of their competitive ability, he added.

Hours before the Trump order, Boeing CEO Kelly Ortberg batted for “free trade” to ensure market access for the company as 80% of its aircraft were exported, and 80% of their content was from the U.S., making it a key exporter for the US and employment generator. 

Boeing alone has over $1.25 billion in annual sourcing from India, and has collaboration with more than 300 supplier partners, with more than 25% being MSMEs.