India in talks With Embraer, Sukhoi to make small jets locally

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India is looking to partner with global aircraft manufacturers, including Embraer SA and Russia’s Sukhoi, to make small planes locally as it seeks to improve connectivity in tiny towns and far-flung areas, according to people familiar with the matter.

The government will keep 51 percent equity with an Indian company, while asking the foreign partner to do technology transfer, the people said, asking not to be identified as the deliberations are at an early stage.

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The jets, which typically seat less than 100 people, are likely to be produced in Prime Minister Narendra Modi’s home state of Gujarat, they said.

The world’s fastest-growing aviation market is trying to ramp up its small-plane fleet as airports with limited capacity and short runways are not equipped to handle narrow-body planes of Airbus SE and Boeing Co. that dominate the Indian skies.

This will help the government bolster tourism and facilitate faster access to remote areas in the South Asian giant of 1.4 billion, which recently has been seen to surpass China in population.

India mandates airlines operate at least 10 percent of their capacity on remote routes, including Kashmir and the Northeast bordering China, which means smaller planes could be more efficient for airlines as they can fill a larger share of total seats.

Airbus SE estimates India will need 2,210 aircrafts by 2040 and 80 percent of them will be smaller jets. The country has piqued global turboprop makers’ interest, with De Havilland Aircraft planning to seize 80 percent of its market for smaller planes of less than 20 passengers.

Regional Workhorse

India has completed preliminary discussions with Embraer, while Sukhoi has expressed interest in manufacturing regional jets locally, the people said. In addition, the country has also approached ATR, a joint venture between Airbus and Leonardo SpA of Italy, to make in India, they added.

Embraer said India has “significant opportunities for regional jets” and the manufacturer “continuously looks for ways to collaborate with India to find win-win solutions.” Representatives for Sukhoi, ATR and the aviation ministry didn’t respond to emails seeking comments.

ATR small planes are the workhorse of regional routes in India with the nation’s top carrier, IndiGo, operating 39 of them. Rival De Havilland’s Dash-8 Q400 turboprops, which seat between 78 and 90 people, are operated by SpiceJet Ltd. State-owned Hindustan Aeronautics Ltd. is already manufacturing the 19-seater Dornier 228 aircraft used by the armed forces and Alliance Air.

The plan is vital to Modi’s push to promote manufacturing and boost economic productivity while creating jobs. The government is strengthening last-mile connectivity by giving subsidies to airlines to make air travel more economical.

As part of a regional connectivity program, India has allocated 45 billion rupees ($545 million) to develop 100 inadequately served airports, heliports and water aerodromes, besides opening 1,000 new routes by next year.

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