Embraer Opens Indian Subsidiary to Expand Defense & Aviation Reach

Brazilian aerospace giant Embraer has taken a significant step into the Indian market by establishing a wholly-owned subsidiary with its corporate headquarters in AeroCity, New Delhi.

This strategic move represents a major commitment to one of the world's fastest-growing aviation markets and signals deeper collaboration between Brazil and India in aerospace and defense sectors.

This announcement comes as India's aviation industry continues its robust expansion, with domestic passenger traffic growing at an impressive 7.8% year-over-year in fiscal 2025^6.

For Embraer, this subsidiary represents more than just a business expansion - it's a comprehensive strategy to tap into India's dynamic aerospace ecosystem.

Current Embraer Footprint in India

Embraer already maintains a substantial presence in India with nearly 50 aircraft spanning 11 different types currently in operation across commercial, defense, and business aviation sectors^1,^2,^3.

This existing fleet provides a solid foundation for the company's expanded operations.

Current Embraer Aircraft in Indian Service:
- Legacy 600: Used by Indian Air Force and Border Security Force for VIP transport
- ERJ145 "Netra": Airborne Early Warning & Control aircraft for Indian Air Force  
- E175 & ERJ145: Commercial operations with Star Air (all-Embraer fleet)
- Various business aviation platforms

The new subsidiary will house teams dedicated to multiple functions including engineering, procurement, supply chain management, and business development^2,^3.

This comprehensive approach suggests Embraer is positioning itself for long-term growth rather than just immediate market entry.

Strategic Defense Opportunities

One of the most significant drivers behind this expansion is Embraer's pursuit of the Indian Air Force's Medium Transport Aircraft program^1,^3,^7.

In February 2024, the company signed a memorandum of understanding with Mahindra Defence Systems to jointly offer the C-390 Millennium aircraft for this requirement.

The Indian Air Force is seeking 40-80 aircraft with cargo capacity between 18-30 tonnes to replace its aging fleet of Antonov An-32s and Ilyushin Il-76s^7,^11. The C-390 Millennium offers compelling capabilities for this mission:

The competition for this contract is intense, with Lockheed Martin's C-130J Super Hercules and Airbus A400M Atlas also vying for the deal^7,^11.

However, Embraer's partnership with Mahindra and commitment to local production could provide a competitive advantage in line with India's Make in India initiative.

Commercial Aviation Growth Prospects

India's commercial aviation sector presents enormous opportunities for Embraer's regional aircraft portfolio.

The country's aviation industry achieved 165.7 million domestic passengers in fiscal 2025, representing 7.8% growth^6.

More importantly, air passenger traffic is projected to grow at 7% in 2025, supported by a growing middle class and increasing affordability^10.

Embraer's E-Jets family is particularly well-suited for India's regional connectivity needs. These aircraft fill a crucial gap between turboprops and larger narrowbody aircraft, making them ideal for connecting tier-2 and tier-3 cities^2,^3.

Star Air's success with an all-Embraer fleet of E175 and ERJ145 aircraft demonstrates the viability of this approach in the Indian market^13.

India's Aviation Growth Indicators:
- Domestic passenger traffic: 165.7 million (FY2025)
- Growth rate: 7.8% year-over-year
- Order book: Nearly 1,900 aircraft among Indian airlines
- Airport expansion: 150 new airports planned nationwide

The government's UDAN scheme for regional connectivity aligns perfectly with Embraer's regional aircraft capabilities^8. This initiative aims to make flying accessible to common citizens and improve connectivity to smaller cities.

India's Aerospace Manufacturing Ecosystem

India's aerospace sector is experiencing unprecedented growth, with projections suggesting it could reach $70 billion by 2030^8.

The government's supportive policies include 100% foreign direct investment allowance, reduced GST on maintenance, repair, and overhaul services, and production-linked incentives.

Several global aerospace companies have already established significant operations in India, recognizing the country's engineering talent and manufacturing capabilities^8.

Embraer's supply chain expansion plans align with this trend, as the company has been evaluating Indian suppliers for aerostructures, machining, composites, and software development^5.

The establishment of this subsidiary will enable Embraer to leverage India's skilled workforce more effectively while contributing to local capability development. This approach supports both the Make in India initiative and Embraer's global competitiveness strategy^4,^5.

Strengthening Brazil-India Bilateral Ties

This business expansion occurs within the context of broader strategic cooperation between Brazil and India.

The defense partnership has been expanding beyond aerospace, with Brazil evaluating India's Akash missile system for its air defense modernization. India's Exim Bank is also set to open its first Latin American office in Brazil, facilitating long-term financing for joint ventures and defense exports^3.

The collaboration extends to various defense sectors:

Urban Air Mobility and Future Technologies

Beyond traditional aviation, Embraer is positioning itself in the emerging urban air mobility sector^1,^2,^4. This forward-looking approach recognizes India's rapid urbanization and the potential for new transportation solutions in major metropolitan areas.

The subsidiary will also focus on advanced technologies including artificial intelligence integration, cybersecurity frameworks, and space-based assets^12.

These capabilities will be crucial as the aerospace industry evolves toward more autonomous and connected systems.

Market Challenges and Opportunities

While the opportunities are substantial, India's aviation sector faces several challenges that Embraer must navigate.

The industry is expected to report net losses of 20-30 billion rupees in fiscal 2025 and 2026, compared to profits in fiscal 2024^6. Supply chain issues and engine problems have impacted several airlines, forcing fleet groundings and operational disruptions.

However, these challenges also present opportunities for companies like Embraer that can provide reliable aircraft and comprehensive support services. The company's established service and support network in India positions it well to address these market needs^1.

Industry Financial Outlook:
- Expected losses: Rs 20-30 billion (FY2025-26)
- Revenue growth: 18-20% expected this fiscal
- Key drivers: Passenger traffic growth, tariff optimization
- Challenges: High ATF prices, increased lease liabilities

Looking Ahead

Embraer's subsidiary establishment represents a calculated bet on India's long-term aerospace potential.

The company is building comprehensive capabilities across the value chain, from engineering and manufacturing to services and support. This holistic approach suggests confidence in sustained growth opportunities.

The success of this venture will depend on several factors, including winning the Medium Transport Aircraft contract, continued growth in regional aviation, and effective localization of supply chains. The company's partnership with Mahindra and commitment to technology transfer could prove decisive in achieving these objectives.

As India continues its trajectory toward becoming a global aviation hub, Embraer's expanded presence positions the company to participate in this growth story while contributing to the country's aerospace capabilities development.

The subsidiary launch marks not just a business expansion but a strategic partnership that could reshape both companies' futures in one of the world's most promising aviation markets.

The establishment of this subsidiary, coming at a time when India's aerospace industry is projected to reach new heights, demonstrates the confidence international players have in India's potential.

For Embraer, this move represents a significant step toward becoming one of the truly global aerospace leaders with strong roots in key emerging markets.