In a watershed moment for India’s defence manufacturing sector, the government has fundamentally altered the landscape of military aircraft production by opening the Advanced Medium Combat Aircraft (AMCA) program to competitive bidding.
This landmark decision, approved by Defence Minister Rajnath Singh on May 27, 2025, breaks Hindustan Aeronautics Limited’s (HAL) decades-long monopoly in fighter aircraft manufacturing and allows private sector giants Larsen & Toubro (L&T) and TATA Advanced Systems Limited (TASL) to compete for the prestigious contract. The policy shift represents a strategic response to HAL’s chronic production delays, particularly with the TEJAS MK-1A program, and aims to leverage private sector efficiency to meet India’s urgent air power requirements.
The Strategic Context Behind The Policy Shift
The Indian Air Force currently operates with only 31 squadrons against an authorised strength of 42 squadrons, representing a critical shortfall of over 25% that has raised serious concerns about operational readiness. Defence experts estimate that India requires approximately 60 squadrons to credibly defend against potential simultaneous threats from China and Pakistan, making the current shortage even more alarming. This capability gap has been exacerbated by the retirement of ageing MiG-21 and MiG-27 aircraft, while new inductions have failed to keep pace with the decommissioning schedule.
HAL’s production bottlenecks have contributed significantly to this predicament, with the company struggling to meet delivery timelines across multiple concurrent programs. The state-owned manufacturer is currently managing the production of 83 TEJAS MK-1A fighters, development of the TEJAS MK-2, Su-30 MKI upgrades, and the HLFT-42 Lead-in Fighter Trainer alongside the HJT-36 Yashas program. The company’s failure to deliver any of the ordered TEJAS MK-1A jets by the original March 2024 deadline, citing supply chain issues, has particularly frustrated Air Force leadership.
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The New Competitive Framework
The approved AMCA Program Execution Model fundamentally transforms India’s approach to military aircraft manufacturing by mandating competitive bidding for both prototype development and production contracts. Under this framework, the Aeronautical Development Agency (ADA) will issue an Expression of Interest allowing Indian companies, including HAL, L&T, TASL, and others like the Adani Group and Kalyani Group, to bid independently or form joint ventures and consortia. This departure from tradition, where HAL would have been the automatic choice, signals the government’s commitment to fostering competition and enhancing efficiency through private sector participation.
The competitive model aims to leverage private sector capabilities to meet aggressive timelines while maintaining strategic oversight through government agencies. Companies must be Indian entities compliant with domestic laws and regulations, ensuring that national security considerations remain paramount while opening opportunities for innovation and efficiency improvements. The approach reflects lessons learned from global aerospace programs where public-private partnerships have accelerated development cycles and improved cost-effectiveness.
HAL’s Position And Challenges
Despite the competitive environment, HAL remains the frontrunner for the AMCA contract due to its extensive experience in aerospace manufacturing and established infrastructure. The company’s Nashik facility, which has produced over 200 Su-30MKI jets under Russian licensing agreements, is positioned to become a potential hub for AMCA production. HAL has already begun preliminary work on AMCA prototypes as early as 2022, giving it a head start in program familiarity and technical understanding.
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However, HAL’s current production commitments pose significant challenges to its AMCA aspirations. The company is struggling to scale TEJAS MK-2 production to 24 jets annually by 2027 while simultaneously managing multiple other programs. The persistent delays in TEJAS deliveries, with the first MK-1A aircraft only delivered from the Nashik facility in June 2025 after multiple postponements, have damaged confidence in HAL’s execution capabilities. Air Chief Marshal AP Singh’s public criticism of HAL’s delivery timeline performance has further highlighted these concerns, with the IAF chief expressing frustration over the company’s inability to meet contractual commitments.
Private Sector Contenders: TASL And L&T
Tata Advanced Systems Limited emerges as a formidable challenger with extensive aerospace and defence manufacturing experience across multiple domains. The company has established significant partnerships with global aerospace leaders, including collaborations with Airbus for C295 military transport aircraft manufacturing in India and joint ventures with Boeing for Apache helicopter fuselage production. TASL’s involvement in critical fighter jet programs demonstrates its technical capabilities, including manufacturing fuselages for Rafale fighters in partnership with Dassault Aviation, wings for F-16 Block 70 aircraft with Lockheed Martin, and tail fins for the indigenous TEJAS program.
The company’s comprehensive portfolio spans Aero-structures and aero-engines, airborne platforms and systems, defence and security solutions, and land mobility systems. TASL’s experience in producing complex aerospace components like the complete structure for Pilatus PC12 aircraft and serving as the global single source for C-130J empennages showcases its manufacturing precision and international competitiveness. The company’s proven track record in missile and rocket launcher systems, including Akash, MRSAM, and Pinaka platforms, further demonstrates its capability to handle sophisticated defence technologies.
Larsen & Toubro brings three decades of defence partnership experience with the Indian Armed Forces and DRDO, positioning it as another strong contender for the AMCA program. The company’s defence portfolio encompasses land-based weapon launch systems, air defence and artillery systems, naval weapon launch systems with fire control solutions, and comprehensive missile systems development. L&T’s successful demonstration of capabilities in manufacturing missile subsystems, including propulsion systems and fin actuation systems, indicates its technical readiness for complex aerospace programs.
The company’s marine manufacturing capabilities span various naval vessels from coast guard and survey vessels to frigates and submarines, demonstrating its ability to handle large-scale, complex manufacturing projects. L&T’s defence business generated ₹6,185 crore in orders during the previous financial year, with ambitious plans to expand into a multi-billion dollar enterprise driven by government modernisation initiatives. The company’s CFO has emphasised their readiness to utilise existing shipyard facilities for defence orders and expand capacity as needed to meet growing demand.
Joint Venture And Consortium Models
The government has proposed innovative partnership structures to maximise the benefits of both public and private sector capabilities. One proposed model envisions HAL holding a 50% stake in a joint venture with four private firms each contributing 12.5%, creating a balanced partnership that leverages HAL’s experience while incorporating private sector efficiency. This structure would distribute work packages across consortium members, including design finalisation, raw material procurement, component manufacturing, and ground support equipment development.
However, some experts argue that HAL’s dominant role in such arrangements could potentially stifle private sector innovation, suggesting that private firms should take the lead to avoid historical production bottlenecks. The Special Purpose Vehicle (SPV) model, previously considered for the AMCA program, would bring together various stakeholders including DRDO, HAL, and private sector firms to ensure efficient development and production. Under this approach, the government agency leads the project while selecting private companies to develop major technologies and components, enabling the transfer of government defence R&D funds to the private sector for major projects.
Timeline And Implementation Challenges
The AMCA program faces an ambitious development schedule that requires careful coordination between all stakeholders. The Aeronautical Development Agency expects to finalise the production partner within six months, as announced by DRDO Chief Dr. Samir V Kamat in June 2025. The first prototype rollout is targeted for late 2026 or early 2027, followed by the maiden flight in 2028, certification by 2032, and service induction by 2034.
This aggressive timeline necessitates parallel development and production planning to avoid delays that have plagued previous programs. The competitive bidding process must balance thorough evaluation of capabilities with the need for rapid program progression to meet strategic requirements. Success will depend on the selected partners’ ability to establish robust supply chains, develop necessary manufacturing infrastructure, and maintain quality standards while scaling production to meet IAF requirements.
The success of this model could serve as a template for future defence programs, potentially extending competitive bidding to other major projects like the Twin Engine Deck-based Fighter (TEDBF), Indian Multi-Role Helicopter (IMRH), and various missile systems. The integration of private sector capabilities with government oversight represents a balanced approach that maintains strategic control while leveraging commercial efficiency and innovation.
The AMCA program’s outcome will significantly influence India’s position in the global aerospace hierarchy, potentially establishing the country as a credible fifth-generation fighter developer and manufacturer. Success would not only address immediate IAF requirements but also create opportunities for export markets, contributing to India’s defence export targets of ₹50,000 crore by FY29. The program represents a critical test of India’s ability to execute complex defence programs through public-private partnerships while maintaining technological sovereignty and strategic autonomy.
This historic shift from HAL’s monopolistic control to competitive bidding marks a new era in Indian defence manufacturing, where performance, efficiency, and innovation will determine success rather than traditional institutional dominance. The ultimate selection of production partners will shape India’s aerospace capabilities for decades to come, making this decision one of the most consequential in the country’s defence modernisation journey.
IDN (With Agency Inputs)
Agencies
