DIPLOMACY MUST 'TRUMP' TARIFFS

The ongoing tariff tit-for-tat between India and the United States is fast becoming more than a trade dispute and now threatening to spill over into high-stakes sectors like aerospace and defence

- ROHIT GOEL

IT WAS RECENTLY REPORTED THAT SUBSEQUENT TO UNITED States imposition of 50 per cent tariffs, India has put a hold on a $3.6 billion deal to procure six additional Boeing P-8I aircraft, used for maritime patrol.

As trade tensions escalate between New Delhi and Washington, the ripple effects may soon reach India's entire aviation industry, and if left unchecked, this escalation could deal a significant blow to India's aviation ecosystem, disrupt procurement cycles, and chill the otherwise growing strategic partnership between the two democracies.

While the current list of tariffs has largely spared aerospace goods, analysts warn that the inclusion of aircraft parts, avionics, and dual-use technologies in future rounds of duties cannot be ruled out — especially if talks between the two trade ministries continue to stall.

IMPACT ON CIVIL AVIATION

India's civil aviation sector is undergoing a historic expansion. Major carriers like IndiGo, Air India, and Akasa Air are on aggressive fleet expansion paths, with hundreds of aircraft on order — many from American manufacturers like Boeing.

If tariff barriers are raised on aircraft components, engines, navigation systems, or MRO tools, the cost structure for Indian airlines could be severely impacted. Operating margins, already squeezed by high fuel costs and airport charges, would come under further pressure. For budget carriers, even a 5-7 per cent increase in component costs can have cascading effects on ticket pricing, route viability, and profitability.