On August 21, 2025, Hindustan Aeronautics Limited (HAL) officially confirmed that the Government of India, through the Cabinet Committee on Security (CCS), has approved the procurement of 97 Light Combat Aircraft (LCA) TEJAS MK-1A fighter jets for the Indian Air Force (IAF).

This ₹62,000-crore deal, one of the largest indigenous defence contracts in the country’s history, marks a watershed moment both for India’s aerospace sector and for its long-standing ambitions of defence self-reliance.

HAL, in its statement to the exchanges, announced that the order was sanctioned on August 19 and includes not only the aircraft but also associated combat-support equipment, reflecting the scale and strategic depth of the procurement. The deal demonstrates the government’s clear push to accelerate indigenisation by boosting the production of combat-ready platforms domestically.

The TEJAS MK-1A is an upgraded and more advanced derivative of the Tejas programme, India’s flagship indigenous fighter aircraft initiative developed by HAL in close partnership with the Aeronautical Development Agency (ADA).

Designed to significantly enhance air combat efficiency, the MK-1A variant incorporates modern avionics, AESA (Active Electronically Scanned Array) radar, long-range beyond-visual-range (BVR) missile capabilities, advanced electronic warfare systems, and easier maintenance features compared to its predecessor.

Crucially, the aircraft is positioned as a replacement for the ageing MiG-21 fleet, which has served the Indian Air Force for decades but is now technologically obsolete and increasingly cost-intensive to maintain.

The induction of the TEJAS MK-1A will not only modernise the IAF but also ensure that India has an indigenous platform forming the backbone of its combat fleet for at least the next two decades.

This mega order also follows an earlier landmark contract worth ₹48,000 crore, signed in February 2021, under which HAL was mandated to deliver 83 TEJAS MK-1A fighters. Under that agreement, deliveries were slightly delayed due to global engine supply disruptions, but those bottlenecks have since been addressed.

With the new order, HAL’s production lines are expected to achieve far greater economies of scale, with annual deliveries ramping up in a phased manner. As per the current delivery schedule, six aircraft are expected to be handed over in FY26, setting the stage for accelerated inductions thereafter.

The expanded order book ensures that HAL’s Karnataka and Tamil Nadu manufacturing facilities will remain fully engaged for over a decade, providing a strong pipeline for India’s largest military aircraft production program.

For the Indian defence ecosystem, the order’s implications are far-reaching. At ₹62,000 crore, the additional procurement will act as a direct stimulus for the domestic supply chain, involving hundreds of MSMEs and private defence companies that supply vital components and subsystems.

It aligns with the government’s “Atmanirbhar Bharat” vision and the long-term objective of reducing dependency on foreign imports.

With advanced technologies being integrated into the MK-1A, there is also a considerable push for the domestic development of avionics, cockpit systems, radars, and data links, thereby uplifting India’s technological base in aerospace engineering.

In financial markets, the announcement had a muted impact on HAL’s share price, which opened marginally lower by 0.16 percent at ₹4,446.4 on the NSE after the news, reflecting that the order had already been widely anticipated by investors following the preliminary reports on August 20.

Nevertheless, analysts believe that the confirmation of the contract improves HAL’s order visibility, strengthens its earnings outlook, and consolidates its leadership in India’s defence manufacturing sector.

Strategically, this latest CCS clearance underlines the Indian government’s commitment to strengthening the IAF’s operational readiness at a time of evolving regional security challenges.

The TEJAS MK-1A, being lighter, multi-role, and combat-proven, is expected to fill the critical gaps in squadron strength while also providing an indigenous foundation alongside advanced foreign imports such as Rafales and the upcoming AMCA (Advanced Medium Combat Aircraft) program.

The deal marks an inflection point in India’s aerospace journey, showcasing a transition from dependence on Soviet and Western aircraft platforms to the emergence of a credible domestic ecosystem capable of meeting large-scale operational demands.

Based On Money Control Report