Why the Air-India plane deal is a sign of India’s economic might

The Air India building in Mumbai. (Photo by Arun Viswam via Wikimedia Commons 3.0)

The agreements signed between Air India and leading aircraft manufacturers Boeing and Airbus on February 14 to acquire around 500 aircraft is an example of India’s growing economic might and reaffirmed the country's image as a “bright spot in the global economy”.

The Tata Group-owned carrier has signed one of the largest single aircraft orders by any airline at a time when many developed economies are staring at the possibility of recession or a deep economic slowdown in 2023.

The positive impact this deal has had can be understood from statements made by US President Joe Biden, French President Emmanuel Macron, and UK Prime Minister Rishi Sunak. Biden dubbed it a “landmark deal” and said it will help create up to one million jobs across 44 states in the US.

Also read: Why Air India placed orders with both Airbus and Boeing

The total number of aircraft ordered from Airbus and Boeing is 470 planes, making it the largest-ever single order in the history of commercial aviation. The numbers do not include the options for 70 more planes, which would make the total order to 540 aircraft.

The record aircraft deal worth $80 billion has not only put Air India in the league of aspiring global carriers but brought focus to India on the global aviation map.

Shortly after the Air India-Boeing deal was announced, White House Secretary Gina Raimondo wrote: “Today, Air India announced its purchasing over 200 American-made aircraft. That's Boeing's third-biggest sale of all time and will support over one million jobs across 44 states. It's a win for American workers and reaffirms the strong relationship between our two nations.”

Her statement comes amid a global economic meltdown that has seen mass layoffs.

Also read: Air India’s Boeing, Airbus orders are a big deal for the West. Here's why

French President Emmanuel Macron also hailed the Air India-Airbus deal and said it paves way for a ‘new stage in the India-France relationship.’ He wrote, “The contract that Airbus and Tata Sons signed this morning marks a new stage in India and France’s strategic partnership,” and thanked Prime Minister Narendra Modi for showing “confidence in France” and its industry.

During a videoconference with PM Modi, Macron said, “India is going to be the world’s third-largest market in the aviation sector.” In fact, the Prime Minister said that India will need more than 2,000 aircraft over the next 15 years, and the “historic announcement will help meet this growing demand."

Taking note of the significance of development, the Ambassador of France to India Emmanuel Lenain said the deal between Air India and Airbus serves as a testament to India's growing importance as an ‘international aviation hub’.

Even the United Kingdom will benefit from the massive Air India deal. British Prime Minister Rishi Sunak remarked that this will be a “huge win for UK’s aerospace sector”. The UK PM said, “This is one of the biggest export deals to India in decades and a huge win for the UK's aerospace sector. With wings from Broughton and engines from Derby, this deal will support jobs around the country and help deliver one of our five priorities – growing the economy.”

Highlighting the global economic impact of the deal, Indian cricket commentator Harsha Bhogle said: “I hadn't imagined a day would come when an American President would issue a statement that an order placed by an Indian company would lead to ‘one million American jobs over 44 states...’.”

Notably, both the World Bank and the International Monetary Fund have retained India’s growth forecast for 2023-24 at above six percent despite looming recession and inflation fears.

While the IMF retained India’s growth forecast at 6.8 percent and 6.1 percent respectively for 2022-23 and 2023-24, the World Bank said it expects the Indian economy to grow at the rate of 6.6 percent in 2023-24, even as it projected a gloomy outlook for the global economy.