HAL Revises ₹6,542 Crore TEJAS MK-1 Contract Amid Delays—Can It Meet the New Timeline?
Hindustan Aeronautics Limited (HAL) has revised its contract with the Indian Air Force (IAF) for the production of the TEJAS MK-1 Final Operational Clearance (FOC) fighter jets, increasing the deal’s value from ₹5,989.39 crore to ₹6,542.20 crore. This adjustment, confirmed in a regulatory filing, comes as HAL grapples with production delays and supply chain challenges.
The TEJAS program, a critical component of India’s indigenous fighter jet initiative, has faced multiple roadblocks over the years. The original contract, signed in December 2010, aimed to establish the TEJAS as a frontline aircraft in the IAF’s fleet. However, due to delays in development, testing, and production, the program has struggled to keep pace with its intended timeline.
The MK-1A Upgrade and Manufacturing Challenges
The TEJAS MK-1A is a significant upgrade over its predecessor, featuring an Active Electronically Scanned Array (AESA) radar, Beyond Visual Range (BVR) missile capability, an advanced Electronic Warfare (EW) suite, and Air-to-Air Refueling (AAR) capability. These improvements make it a far more capable fighter, aligning with modern combat requirements.
As part of India’s "Buy (Indian-Indigenously Designed, Developed, and Manufactured)" policy, the TEJAS program focuses on domestic manufacturing, with 50% of its components currently sourced locally. The target is to increase this figure to 60%, enhancing self-reliance in defence production. Of the 344 systems integrated into the TEJAS MK-1A, 250 are supplied by Indian manufacturers—a significant boost to the domestic defence industry.
Despite these efforts, HAL has faced persistent challenges in production and deliveries. The Defence Ministry had signed a ₹48,000 crore deal in 2021 for 83 TEJAS MK-1A jets, with initial deliveries set for March 2024. However, as of now, HAL has yet to deliver any aircraft, mainly due to production hurdles, supply chain issues, and certification delays.
Engine Supply: A Crucial Factor in Overcoming Delays
One of the key challenges in accelerating TEJAS production has been the supply of F404-IN20 engines, developed by GE Aerospace. The American defence giant recently delivered the first of 99 engines ordered for the program. These high-thrust engines, specifically designed for India's single-engine fighter, are expected to boost production timelines significantly.
GE Aerospace had to restart production after a five-year hiatus, facing additional delays due to disruptions caused by the COVID-19 pandemic. The company worked closely with HAL engineers to ensure compatibility with TEJAS' unique design specifications. With the engine supply now in motion, HAL has an opportunity to fast-track the assembly process and address its backlog.
HAL’s Financial Strength and Strategic Importance
Despite the delays, HAL’s financial performance remains strong. On March 27, its stock closed at ₹4,170 per share on the National Stock Exchange (NSE), with a market capitalisation of ₹2.78 lakh crore. The company reported a net profit of ₹1,432.60 crore for the quarter ending December 2024, marking a 14.28% increase from the previous year. Revenue from operations also saw a 15% rise, reaching ₹6,956.93 crore.
As one of India’s leading defence public sector undertakings (PSUs), HAL plays a crucial role in strengthening the country’s defence capabilities. The TEJAS program, despite facing multiple hurdles, remains a symbol of India's push for self-reliance in military aviation. The coming months will be critical in determining whether HAL can meet its revised production targets and establish TEJAS as the backbone of the IAF’s fighter fleet.
With contract amendments finalised and supply chain issues being addressed, HAL is under pressure to deliver on its commitments. If it succeeds, the TEJAS MK-1A will not only enhance the IAF’s operational strength but also boost India's defence exports in the long run.
