The Ministry of Defence has signed a contract worth ₹62,370 crore with Hindustan Aeronautics Limited (HAL) for the supply of 97 Light Combat Aircraft (LCA) Tejas Mk1A jets. This deal includes 68 single-seat fighter aircraft and 29 twin-seat trainer versions. Deliveries are scheduled to begin in 2027–28 and are expected to be completed over a period of six years.
The aircraft will be built under the “Buy (India-IDDM)” category, which means they must be indigenously designed, developed, and manufactured in India. The Tejas Mk1A ordered under this deal will have more than 64 percent indigenous content and will incorporate 67 improvements over the earlier version. Around 105 Indian companies are expected to be part of the vendor ecosystem supplying critical components, showing how deeply the project will engage India’s private sector.
For the Indian Air Force, which currently operates 31 fighter squadrons against a sanctioned strength of 42, this contract comes at an important moment. The IAF is retiring its aging MiG-21 fleet, and the addition of 97 new aircraft will be crucial to maintaining operational readiness. With an earlier order of 83 Mk1A jets already placed, the total number of these aircraft on order rises to 180.
The new deal builds on a strong financial foundation. In the third quarter of FY25, HAL reported a consolidated net profit of ₹1,440 crore, up about 14 percent compared to the same period in the previous year. This growth was driven by rising demand for fighter jets, spares, and support services.
In the April–June 2025 quarter, HAL recorded a net profit of ₹1,377 crore, which was slightly lower than the same quarter last year. However, revenue rose 11 percent to ₹4,819 crore, and operating margins improved to 26.7 percent, showing healthy performance. The company’s board also recommended a dividend of ₹15 per share for FY25, reflecting confidence in its cash flow and profitability.
HAL’s order book has expanded rapidly in recent years. It stood at about ₹94,127 crore in FY24, rising to ₹1.89 lakh crore in early FY25. With the new order, the backlog is expected to cross ₹2 lakh crore. This gives HAL strong revenue visibility for the next decade and cements its place as India’s leading defence manufacturer.
Despite the financial windfall, the real test lies in execution. HAL has faced criticism in the past for delays in meeting production schedules. The initial batches of the LCA Tejas, as well as other aircraft programs, have often slipped behind timelines.
Currently, HAL’s Bengaluru facility has the capacity to manufacture about 16 Tejas aircraft per year. A new production line at Nashik could raise output to 24 aircraft annually, but this capacity expansion must be carefully managed. Any delays in scaling production will push back deliveries to the Air Force.
The supply chain is another major factor. Although more than a hundred Indian companies are part of the project, they will need to scale up and meet stringent quality standards. Defence aviation is an unforgiving field, and even minor delays in components can disrupt final assembly schedules.
The new Mk1A jets are not just a repeat of earlier versions. They incorporate 67 new items, including advanced avionics, improved actuators, and updated electronic warfare systems. Integrating these upgrades requires rigorous testing and certification, which is time-consuming. If these processes are not completed smoothly, delivery timelines may be affected.
This contract is not just a business win for HAL; it is a milestone for India’s defence sector. It strengthens the “Atmanirbhar Bharat” vision of self-reliance in critical technologies. By sourcing most of the systems from within the country, India reduces dependence on foreign suppliers and builds long-term capabilities in aerospace engineering.
The project will also give a boost to the domestic supply chain. The 105 vendor companies involved will benefit from technology transfer, long-term contracts, and new opportunities for growth. This has the potential to create jobs, stimulate research, and expand India’s defence industrial base.
Success with the Tejas Mk1A will also raise confidence in future programs such as the Tejas Mk2 and the Advanced Medium Combat Aircraft (AMCA). In addition, it could open the door for exports of the Tejas to friendly nations, helping India emerge as a credible supplier in the global fighter jet market.
HAL is not limiting itself to fighter jets. The company recently won a contract worth over ₹500 crore from IN-SPACe to manufacture small satellite launch vehicles. This marks its entry into the space launch sector, diversifying beyond its traditional role. The government has also granted HAL the status of “Maharatna,” giving it greater autonomy to make financial and operational decisions. These developments reflect HAL’s growing importance in India’s broader aerospace and defence ecosystem.
HAL’s main strengths are its financial stability, large order book, and strong government backing. It has decades of experience in building aircraft and helicopters, as well as a ready vendor ecosystem. The Tejas program itself has matured over time, giving the company a solid base to work from.
However, weaknesses remain. Delays in production and certification continue to be a concern. Expanding capacity to meet delivery targets will require heavy investment in infrastructure and human resources. Retaining skilled engineers and ensuring quality across a wide vendor base will be critical.
There is also the risk of technical obsolescence. If delays extend too long, the Tejas Mk1A could find itself outpaced by global competitors. Cost overruns and rework due to integration challenges are additional threats.
For HAL to meet its commitments, several conditions must be fulfilled. Strong project management is essential, with milestone-based tracking and strict accountability. Vendor development must be prioritized, with training, oversight, and quality checks in place.
Infrastructure needs to be scaled up early, including assembly lines, testing facilities, and integration labs. Prototyping and trials should be conducted in parallel with production planning to catch issues early. Most importantly, the company must invest in its workforce, attracting and retaining talent in avionics, systems engineering, and quality assurance.
Transparent oversight and periodic reviews will also help maintain discipline and build confidence in the program.
In the best-case scenario, HAL manages to expand production smoothly, integrates new technologies without major issues, and completes deliveries by around 2033. This would greatly strengthen its reputation and open doors for exports.
In a more realistic base case, there may be delays of about a year, but the deliveries would still be largely on track, finishing by 2034–35. Even with minor slippages, this outcome would still represent a major achievement.
The worst case would involve serious technical challenges, cost overruns, and prolonged delays. In such a situation, the credibility of HAL would suffer, and future government contracts could be at risk.
The ₹62,370 crore order for 97 Tejas Mk1A jets is both a massive opportunity and a serious test for Hindustan Aeronautics Limited. The company now carries the responsibility of not just fulfilling a contract, but also proving that India can design, develop, and manufacture world-class fighter jets at scale.
The financials and government support are firmly in place. The challenge lies in execution, where HAL has to overcome past weaknesses and deliver with discipline. If it succeeds, the program will transform India’s aerospace industry and establish HAL as a global player. If it falters, the cost will be measured not only in money but also in lost credibility.
The coming decade will show whether HAL can turn this windfall into a milestone of national pride or whether it will remain a reminder of promises unfulfilled.