The CAG indictment comes after a parliamentary standing committee on defence in an earlier report had also come down heavy on HAL for the inordinate delay of Tejas fighter jet production

The Comptroller and Auditor General (CAG) of India has castigated leading state-owned Hindustan Aeronautics Limited (HAL) for serious lapses in the design and development of aircraft engines including the absence of feasibility studies and project reports, ignoring technical review by domain experts, use of “substitute” and not original materials in manufacturing, that lead to production delay and a loss of ₹159.23 crore as of March 2022.

In its 18th report on defence PSUs for the year ended March 2020 presented in parliament on Thursday, the auditors critically observed that “HAL did not envisage the risks associated with Project 1 which resulted in taking up several unplanned activities. The scope of the project was modified after the initiation of the D&D (Design and Development) activities. Further, HAL failed to anticipate the delay in availability of the originally planned material due to which the Core Engine 1 was manufactured using substitute materials.”

This resulted in, as per the CAG, HAL manufacturing a second Core Engine 2 with the originally planned material. “The expenditure of ₹159.23 crore incurred as of March 2022 was impaired,” the auditors revealed.

The CAG indictment comes after a parliamentary standing committee on defence in an earlier report had also come down heavy on HAL for the inordinate delay of TEJAS fighter jet production which is impinging Indian Air Force preparedness due to depleting fleet strength.

The CAG in its report further highlighted deep flaws such as “incorrect assessment of the required thrust and lack of clarity on availability of A Type Engine leading to improper engine selection which in turn had a cascading effect on the D&D process of Project 2 (engine)“. Further, lack of clarity on the resolution of stall and spin issues and improper planning in the initial stages of the development process, led to a delay of more than 20 years in the project that was initiated in July 1999, the CAG pointed out.

The D&D of Aircraft 2 was initiated in 2014 with the internal resources of HAL for the avionics upgrade of the platform. “No business plan was drawn up either before embarking upon the project or during the progress of the project so as to ensure Recovery of Investment (RoI). As there was no firm commitment for Aircraft 1, the entire expenditure incurred amounting to ₹153.98 crore was impaired,” it said.

According to CAG, HAL took up the possible UAV ‘Project 3’ and the D&D was started without seeking specific requirements from potential customers and market exploration or survey was also not carried out either before or after completion. “Despite incurring an expenditure of ₹9.54 crore, Project 3 was not feasible for Defence security applications and therefore HAL could not penetrate the market in an emerging UAV industry,” the auditors remarked.