The recent discussions surrounding the manufacturing of the Light Combat Aircraft (LCA) TEJAS by the private sector have raised concerns about its economic viability. The Hindustan Aeronautics Limited (HAL) has announced plans to outsource approximately 35% of TEJAS manufacturing to private firms, including major players like Larsen and Toubro and Dynamatics. This move is part of HAL's strategy to increase production capacity as it aims to deliver upgraded TEJAS MK-1A fighters equipped with advanced technology within a specified timeframe.

The production of the indigenous TEJAS is currently under the management of Hindustan Aeronautics Limited (HAL), which is ramping up its capabilities to meet the increasing demands of the Indian Air Force (IAF). However, the notion of establishing a separate manufacturing line for the TEJAS by private sector players has been deemed economically unviable, according to various sources.

HAL has been producing around 16 aircraft annually, with plans to ramp this up.

HAL is set to enhance its production capacity significantly. The company has three production lines, which are expected to allow for the manufacture of 24 aircraft per year by 2025. This increase is crucial as HAL aims to fulfil its commitment to deliver 83 TEJAS MK-1A fighters by 2028-29 and has recently received a new order for 97 additional aircraft.

By leveraging new facilities in Nashik and optimizing existing lines, HAL aims to achieve a consistent output of 24 aircraft per year, addressing the urgent needs of the IAF as it phases out older jets like the MiG-21.

However, the private sector's involvement in TEJAS manufacturing is fraught with challenges that may render it economically unviable. These challenges include:

Establishing the necessary infrastructure for TEJAS production requires significant capital investment, which may not yield immediate returns. The complexity and scale of manufacturing defence aircraft can deter private companies from committing resources without guaranteed contracts or support from the government. The current assembly lines, regardless of whether they are managed by HAL or private firms, are considered too slow to meet the IAF's requirements. The existing infrastructure and production methodologies are cited as significant constraints.

Transitioning to a model that includes private sector participation would require substantial investment and expertise transfer. Given HAL's established capabilities and existing contracts, diverting resources to set up parallel lines could lead to inefficiencies and delays rather than expedite production.

The defence market is characterized by fluctuating demands and stringent regulatory requirements. Private manufacturers may face difficulties in securing consistent orders, leading to financial instability.

The TEJAS program demands advanced technological capabilities and skilled labour, which may not be readily available in the private sector. Companies might struggle to meet the rigorous standards required for defence manufacturing, impacting their competitiveness.

Outsourcing components and materials can introduce vulnerabilities in the supply chain, particularly if suppliers are not reliable or if there are geopolitical tensions affecting imports.

Defence projects often experience budget overruns due to unforeseen technical challenges or delays in production timelines. Private firms may find it challenging to absorb these costs without adequate financial backing.

HAL is currently under pressure to meet its existing orders. Any shift towards establishing new production lines could detract from fulfilling these commitments, especially given the ongoing delays related to engine supplies from General Electric (GE) which have impacted timelines.

HAL's initiative to involve private companies in TEJAS manufacturing reflects a progressive approach towards enhancing indigenous defence capabilities, the economic viability of this model remains uncertain. Factors such as high initial investments, market unpredictability, technical challenges, supply chain complexities, and potential cost overruns could hinder the success of this outsourcing strategy in the private sector.

However, defence experts and officials indicates that HAL's current strategy of enhancing its own production capabilities is more viable. The focus remains on optimizing existing resources and ensuring timely delivery of aircraft to meet national defence needs. The establishment of a separate manufacturing line by private players appears unlikely in the near term due to economic considerations and logistical challenges.