Boeing to expand business in India

NEW DELHI -- Boeing Co. has tentatively agreed to send as much as $1 billion in aerospace manufacturing work to state-owned Hindustan Aeronautics Ltd. in India over the next 10 years.

Under the agreement announced Thursday, Chicago-based Boeing will share some its key business and manufacturing tools with Hindustan Aeronautics, said Jim Albaugh, president and chief executive of Boeing's defense aerospace business.

Boeing hopes the agreement will help meet its obligations under existing or future jet purchase deals with the Indian government, which requires aircraft makers to reinvest in the country a portion of any order they win from state-run companies or agencies.

In 2005, Boeing won an order for 68 airplanes worth $11.4 billion from state-run Air India, and the company is currently in the fray for a large fighter jet contract from the Indian Air Force, which plans to buy 126 new airplanes.

"The agreement represents an important step in our efforts to build solid, long term partnership in India," Albaugh said.

The U.S. aircraft maker will help the Indian company in developing manufacturing processes and capabilities needed for the production of military hardware for Boeing and its subcontractors.

Hindustan Aeronautics gains "in terms of tech upgrade, while Boeing can look forward to a reliable source for its product requirement," Albaugh told reporters after signing the agreement.

The two companies will explore business opportunities aimed at transferring to India work with an initial value of up to $20 million annually, a Boeing statement said.

The value of the work would increase as its size and complexity grows in the following years, the statement said. It said the work transferred over a 10-year period would be worth at least $1 billion.