Boeing Co (BA.N) has deferred its plan to make plane components in India’s southern state of Karnataka from 2022, two sources with direct knowledge of the matter told on Wednesday, citing the impact of the coronavirus crisis on global aviation.
The delay reflects Boeing’s weak global order book, though the manufacturing plan would be reviewed regularly and altered as the market improves, said the sources, who declined to be named on a topic they deemed sensitive.
The U.S. planemaker’s decision comes at a time when the pandemic has also forced Japanese carmaker Honda Motor Co (7267.T) to halt production at one of its two factories in India, which is trying to win over business from rival China.
Boeing’s Karnataka plant, being built near the technology city of Bengaluru, was to make electronic systems and components that convert electrical signals to mechanical movements in an aircraft.
There is no impact on staffing due to the change, said one of the sources, adding that Boeing would nevertheless consolidate its multiple offices under one roof near the Bengaluru airport, focusing on research and development.
“We continue to explore new business and investment opportunities, as well as potential research and development partnerships that ultimately align and contribute towards building an Aatmanirbhar Bharat,” Boeing said in a statement, referring to Prime Minister Narendra Modi’s call for self-reliance by boosting local manufacturing.
Boeing said it continues to invest in building a local supply chain with partners, and sources parts worth $1 billion a year from 225 suppliers in India. It also runs a plant with Mumbai’s Tata conglomerate making components like fuselage for Apache attack helicopters in the city of Hyderabad.