The Indian government is evaluating a significant restructuring of Hindustan Aeronautics Limited (HAL) in an effort to accelerate defence production and improve operational efficiency. This move comes against the backdrop of HAL’s enormous ₹2.7 lakh crore order backlog, which has raised concerns over its ability to deliver critical platforms on time to the armed forces. reported TOI.

Currently, HAL’s pending orders are more than eight times its annual revenue, creating a mismatch between demand and throughput capacity. This has led to increasing delays in fulfilling crucial contracts, including deliveries of the Light Combat Aircraft (TEJAS) to the Indian Air Force (IAF). The backlog encompasses fighter jets, helicopters, utility rotorcraft, and propulsion systems, with more defence contracts expected in the near future.

To address the issue, the government has initiated the groundwork for a comprehensive strategic plan involving structural reform. Officials have confirmed that an external consultancy firm has been engaged to assess HAL’s existing operations and organisational model. Consultations are already underway with senior executives to explore optimal ways of enhancing efficiency.

Past restructuring discussions had proposed dividing HAL into three autonomous entities focusing separately on fixed-wing aircraft, helicopter manufacturing, and maintenance-repair-overhaul (MRO) services. The idea was to create specialised verticals that could streamline operations and increase delivery speed. However, this plan was shelved earlier due to insufficient orders that could support such a division.

Today, with a much larger order book and mounting delivery challenges, restructuring is back on the table. One of the biggest concerns stems from HAL’s delays in supplying the Tejas Mk1A, which the IAF has placed significant reliance on to address its declining squadron numbers. So far, none of the 83 Tejas Mk1A fighters ordered in February 2021 for ₹46,898 crore have been delivered, despite HAL assuring that the first two jets will be handed over in October.

Adding to the pressure, the IAF recently signed a record-breaking ₹66,500 crore deal for 97 more TEJAS MK-1A aircraft, substantially increasing HAL’s commitments. With the expansion of these contracts, HAL’s ability to keep pace with schedules is being closely scrutinised. The delays are also affecting parallel programmes like the AMCA (Advanced Multirole Combat Aircraft), a next-generation fighter jet initiative that needs HAL’s deeper involvement and resources.

On the positive side, HAL has managed to stabilise its supply chain to some extent. A major bottleneck was the provisioning of 99 GE F404 turbofan engines, which are vital for powering the Tejas Mk1A fleet.

HAL had inked a ₹5,375 crore contract with US-based General Electric in August 2021, and officials now confirm that engine deliveries are showing signs of consistency.

The restructuring push is also aimed at freeing up HAL’s bandwidth for future programmes while ensuring faster rollouts of current orders. Defence officials view the long-delayed reorganisation as both timely and necessary given the scale of commitments. If implemented, HAL could see the creation of standalone production hubs, heightened output rates, and an overall shift to a more corporate-style operating model focused on speed and efficiency.

As the armed forces face mounting requirements, particularly in fighter aircraft and helicopters, the government’s push for reforming HAL may prove decisive. A clearer operational strategy and streamlined production structure are expected to enable faster deployment of indigenous platforms, strengthen air force capabilities, and better align with India’s broader defence indigenisation goals.

Based On TOI Report