Hindustan Aeronautics Limited (HAL) is entering a new era as India's government opens the door for private sector participation in indigenous fighter jet manufacturing. The Advanced Medium Combat Aircraft (AMCA) project marks the watershed moment, with over 28 private defence firms signalling interest and at least seven major contenders formally submitting bids to co-develop and produce India’s first stealth fighter jet.

This initiative represents a strategic shift from past practices, where HAL held a near-monopoly on combat aircraft production, and signals government intent to accelerate capability development, reduce project delays, and tap private expertise for future fleet modernisation.​​

The AMCA is a twin-engine, fifth-generation stealth fighter envisioned with advanced avionics, internal weapons carriage, supercruise, and artificial intelligence-enabled sensor fusion. The project, led by DRDO's Aeronautical Development Agency (ADA) with HAL, will now involve a consortium of private companies that meet stringent requirements for technology, financial strength, and prior aerospace experience. The selected partners will work closely with HAL and ADA throughout prototyping, integration, and full-scale production phases, with a budget of ₹15,000 crore allocated for initial development.​​

Private Sector Disruption: The C-295 Success Model: TATA's Game-Changing Achievement

The C-295 deal marked a watershed moment in Indian defence aviation. TATA Advanced Systems Limited's partnership with Airbus to deliver 56 transport aircraft worth $2.5 billion demonstrated that private companies could execute complex military aviation projects with superior speed and efficiency. The Vadodara facility, inaugurated in October 2024 by Prime Ministers Modi and Sanchez, became India's first private military aircraft factory.​

Under the contract structure, 16 aircraft arrived from Spain in fly-away condition, while 40 are being manufactured in India with deliveries scheduled to complete by August 2031. The project achieved 67% indigenous content progression and created over 600 highly skilled jobs directly, with additional thousands in the supply chain.​

Private Sector Participation

Coming back to the AMCA program, major Indian firms vying for partnership include Larsen & Toubro (L&T), Adani Defence, TATA Advanced Systems, Kalyani Strategic Systems, Mahindra, among others.

The government intends to shortlist two private players to co-own the development process alongside HAL. This partnership promises access to core intellectual property, manufacturing know-how, and assured orders, helping catalyse India’s emergence as a global defence exporter.​​

In a recent development, Adani Defence & Aerospace, part of the Adani Group, has partnered with Hyderabad-based MTAR Technologies to bid for the ₹15,000 crore contract to develop and build the prototype of the AMCA, according to a report by Business Standard.

Impact On HAL And Indian Industry

HAL’s future role is evolving from sole manufacturer to systems integrator and consortium partner, leveraging its experience while benefiting from the efficiency, competitiveness, and supply chain discipline of private industry. This hybrid model, if successful, could set the template for future indigenous projects—including unmanned systems and transport aircraft—enabling India to build a robust, self-reliant defence manufacturing base and meet the ambitious goals of the "Atmanirbhar Bharat" initiative.​

Strategic Stakes

The AMCA is essential to addressing India’s shrinking fighter squadron strength amidst regional competition with China’s J-20 and Pakistan’s J-10C/J-35 fleets. Success would vault India into the top echelon of stealth aircraft producers, reduce reliance on foreign imports, and establish a modern industrial ecosystem capable of supporting future strategic programs. Failure or delays, however, risk entrenching doubts about India's manufacturing maturity and self-reliance agenda.​

Selection Timeline And Risks

A high-level evaluation committee is currently reviewing private sector applicants, focusing on their technical capacity, supply chain maturity, and commitment to long-term aerospace investment. A final decision is expected by mid-2026, with prototype rollout targeted for 2027–2028 and deployment around 2033–2035.

Key Risks

If private firms lead AMCA manufacturing, HAL faces several significant risks that could impact its role and position in the Indian aerospace sector.​ Key risks include mastering stealth design, supply chain scale-up, indigenous engine development, and managing cost-control in a complex, high-stakes environment.​​

a) Loss of Monopoly And Strategic Control

HAL risks losing its historical monopoly over combat aircraft production, with authority over integration, IP control, and final testing moving to private entities. This transition could erode HAL's influence on key decision-making and limit its future leadership in advanced programs. Control over engineering, quality assurance, and defence supply chains may gradually shift, reducing HAL's gatekeeping power in strategic projects.​

b) Declining Order Volume And Financial Impact

HAL’s business model—built around large government order books—is threatened as major contracts and manufacturing work packages get distributed to private competitors. With private firms bidding independently or forming joint ventures, HAL could lose direct access to the lucrative production phase, impacting revenue, scalability, and long-term sustainability.​

c) Innovation And Talent Drain

As private companies like TASL and L&T demonstrate greater agility, global partnerships, and advanced manufacturing expertise, HAL risks falling behind in terms of innovation, talent retention, and competitiveness. The shift to ecosystem integration, with modular work packages and shared responsibilities, may attract skilled engineers and project managers away from HAL to dynamic private sector roles.​

d) Exposure of Systemic Inefficiencies

HAL's past track record of production delays—such as delivery failures with TEJAS MK-1A—has already damaged client confidence. Increased competition will expose legacy inefficiencies in scaling, supply chain management, throughput, and cost control, putting pressure on HAL to reform or risk obsolescence. Vulnerability to external audits and public scrutiny will rise as performance metrics become transparent.​

e) Possible Marginalisation From Future Programs

If private firms successfully deliver AMCA on time and to specification, HAL’s role in future projects—such as unmanned vehicles, next-generation trainers, or indigenous transport aircraft—could be further diminished. The government might prefer competitive or consortium models, reducing HAL to a Tier-2 supplier or legacy partner rather than systems integrator.​

In sum, India stands at a critical crossroads: the choice to pursue a balanced HAL-private sector AMCA consortium could transform defence manufacturing or set the country back for decades, underscoring the urgent need for focused leadership and bold reform.​

IDN (With Agency Inputs)