According to the Hindustan Times, Boeing Co (NYSE:BA) is in talks with the Indian government to set up a production plant for the Boeing F/A-18 Super Hornet, as part of their larger plan to invest billions of dollars in the country. If the agreement goes through, Boeing will have the ability to tap into India’s highly technical and cheap labor force.

The F/A-18 Super Hornet is a twin-engine, supersonic, all weather, multirole fighter jet, and has the capability of landing and taking off from an aircraft carrier, according to Boeing's website. This development comes after the world's largest aerospace corporation announced plans to invest billions of dollars in the South Asian country.

This is a perfect opportunity for Boeing to establish itself in country. Incentives from the government, such as the "Make in India" campaign, is helping to make things easier for foreign companies to establish themselves in India.

The aerospace giant is planning on setting up an industrial capacity, capable of manufacturing the full life cycles of planes. The FA/18 production plant has enough depth and capacity to harness room for further growth. With a production plant in place, Boeing will have a set investment in capabilities, infrastructure and partnerships in India, making room for further expansion.

The company is taking an active initiative to expand the aerospace industry in India. Boeing has predicted that over the next five years, India's population will grow to a staggering 1.6 billion people, giving them primary access to an enormous market.

Furthermore, according to the International Air Transport Association (IATA), India’s airspace will become the largest market by 2030. Currently, India has the 8th largest airspace market, worth $16 billion. Air travel is expected to grow around 6.4% annually as well. With consistent GDP growth and significant development of the middle class, India is an ideal investment point for the aerospace giant.

The company has also hinted at developing fifth-generation fighter jets for the Indian government. Boeing develops the F-22 Raptor jointly with Lockheed Martin, which is a future growth option for the former.

Moreover Indian Prime Minister, Narendra Modi, has increased India’s defense expenditure substantially, making the country one of the world’s largest consumers of defense arsenal. Just recently, India purchased $2.5 billion worth of helicopters from Boeing in September, 2015.

However, the deal is subjected to government-to-government approval, which isn’t expected to face major hurdles. Boeing is heavily dependent upon the US government for orders, with more than 85% of revenues coming from the Pentagon. The company will have to be careful in its discussions with both governments.

Additionally, according to the guidance for 2016, Boeing's military aircraft segment is expected to have revenues of $12.3 billion, decreasing by 10% from revenues earned in 2015. With expansion plans for India, total operating revenue could decrease substantially for the Boeing military aircraft segment. However, in the future, margins could improve significantly, with lowering costs, because of production in India.

Nevertheless, Boeing is not the first aerospace corporation to enter India; rival company AIRBUS GROUP (OTCMKTS:EADSY) had entered the aerospace industry long ago. The first Airbus’ footprint in India was found in 1980, when an agreement was reached with Hindustan Aeronautics Limited (HAL) to manufacture doors for the A320. HAL produces half of the A320's total number of doors.

Airbus currently controls the fast growing Indian aerospace sector, through its fully-owned subsidiary, Airbus India Operations, established in December 2013. In addition, Airbus has expanded in engineering, manufacturing of aero-structures, information technology, research and design, and sub-assemblies throughout the country.