The Government of India is “very interested” in buying Embraer’s Commercial Aircraft division, an unnamed “top-ranking government official” has told India’s Business Standard newspaper.
“We are very interested. We are exploring alternatives,” the official said, elaborating that India’s interest had been conveyed to the Brazilian government and that financing could be made via India’s sovereign wealth fund, the National Investment and Infrastructure Fund.
It is the first time the Indian government has confirmed a willingness to strike a deal since Reuters reported exclusively on May 29, following Boeing’s exit from an anticipated USD4.2 billion commercial aviation tie-up, that both India and China’s state-owned COMAC manufacturer had expressed informal interest in cooperation with Embraer.
“India, another rising aerospace power focusing mainly on defence but with a huge civil market, has informally conveyed interest at the government level while still studying the matter,” Reuters said at the time citing anonymous sources.
Embraer has lost value during the coronavirus pandemic, in early August posting second-quarter losses of USD315 million. It is a listed company with diversified shareholding, but the Brazilian government has veto power over any change of control.
“There are risks in considering a deal. But where else will we get a similar company?” the official told Business Standard, adding that the subject had been debated among high-level government decision-makers.
A key aspect to a deal would be Embraer's willingness to set up operations in India. The manufacturer did not respond to a request for comment from Business Standard, but a spokesperson at the Embassy of Brazil in New Delhi said: “The Brazilian government would be naturally supportive of any contribution of Embraer to India’s growth story and the strengthening of bilateral relations. India is set to be the largest market for aviation in the coming years, despite the impact of the pandemic.”
