Air India's Boeing & Airbus deals are worth almost half of Pakistan's GDP

Air India, the Tata Group-owned airline, is buying 470 planes at a total estimated outlay of roughly $150 billion, which is an amount that is near equivalent to half the GDP of Pakistan. According to the World Bank, Pakistan's GDP was pegged at $346.28 billion in 2021, compared to India's $3.18 trillion in the same year. What's more, the two agreements combined are worth 50 times higher than Pakistan's forex reserve, which stood below $3 billion earlier this month. 

According to Pakistani media outlet Dawn, the country's forex reserves fell to $2.9 billion in early February. However, the net foreign reserves held by commercial banks ($5.6 billion) took the liquid foreign reserves to just about $8.5 billion. 

The multi-billion dollar agreements between Air India, Airbus and Boeing reveals a sharp geopolitical contrast in the southeast Asia, especially to those in cash-strapped Pakistan who have a habit of hyphenating the two nations. The Air India-Boeing agreement was finalised at a time India is hosting Asia's biggest biennial five-day air show Aero India 2023 at the Yelahanka Air Force Station in Bengaluru. 

Meanwhile, the first of the new aircraft will enter service in late-2023, with the bulk to arrive from mid-2025 onwards. In the interim, Air India has already started taking delivery of 11 leased B777 and 25 A320 aircraft to accelerate its fleet and network expansion. 

'Reflects strength of US-India partnership': Joe Biden

US President Joe Biden, on Tuesday, announced the deal which was officialised between Air India and US-aircraft manufacturer Boeing. The Tata Group-owned firm will procure 220 airplanes from Boeing worth $34 billion under an agreement Biden called ‘historic’. According to an official statement from The White House, Biden said that this “reflects the strength of the U.S.-India economic partnership.” In addition to this, Air India also finalised the agreement with French manufacturer Airbus to procure 250 new aircrafts.

Notably, the orders from Boeing include 190 737 Max aircraft, 20 of Boeing’s 787s, and 10 of its 777Xs. The purchase also includes customer options for an additional fifty 737 MAXs and 20 of its 787s, totaling 290 airplanes for a total of $45.9 billion. On the other hand, Air India will buy 210 single-aisle A320neos and 40 widebody A350s planes.

"The United States can and will lead the world in manufacturing. I am proud to announce today the purchase of over 200 American-made aircraft through a historic agreement between Air India and Boeing. This purchase will support over one million American jobs across 44 states, and many will not require a four-year college degree", Biden said in an official statement.