India's Advanced Medium Combat Aircraft (AMCA) project exemplifies the country's drive toward Atmanirbharta (Self-Reliance) in defence aerospace but faces significant fiscal and structural challenges.

The project aims to develop a fifth-generation stealth fighter with five prototypes planned for development, first flight expected by late 2028, and series production by the mid-2030s targeting induction of seven squadrons by the 2040s.

The key challenge is not only technological but fiscal—sufficient and sustained budget allocation is crucial as India’s defence budgets have historically skewed toward manpower-heavy land forces rather than capital-heavy air and naval assets.

The AMCA's estimated costs include ₹15,000 crore for design and prototypes, ₹61,000 crore planned for co-development of a 120 kN engine with France’s Safran, and ₹1.2 to ₹1.5 lakh crore for series production—requiring significant capital allocation from the Indian Air Force’s budget.

India has recognised the longstanding structural weakness of relying solely on Hindustan Aeronautics Limited (HAL), which has operated with a monopoly over fighter jet production and has struggled with delivery delays affecting projects like TEJAS and its variants.

The AMCA initiative marks the first definitive break from this model with major private sector players such as TATA, L&T, Bharat Forge, and Adani actively brought into the project, encouraging private-public consortiums for prototype development, testing, certification, and manufacture.

HAL itself is undergoing potential restructuring into specialised units (fixed-wing aircraft, helicopters, MRO services) to improve efficiency and enable competition. This unbundling is driven by an order backlog over ₹2.7 lakh crore and the government’s desire to dismantle PSU dominance in aerospace.

Design control remains largely unshared, as AMCA’s design is led by ADA/DRDO without parallel competing firms or design houses, representing a risk for budget overruns and delays. This contrasts with international models like the US NGAD program with multiple competitors or Japan’s Keiretsu systems that foster industrial-financial ecosystem integration.

India’s approach aims to combine sovereign funding for core aircraft and engine development with private capital mobilised for infrastructure, tooling, and vendor expansion. The political and fiscal ecosystem may involve financial institutions like SBI and LIC to provide credit and long-term investments, fostering a stable industrial base for aerospace beyond AMCA.

The fiscal crunch remains acute as AMCA funding must compete with other modernisation priorities such as TEJAS MK-2, MRFA replacement fighters (likely Rafale-F4), AWACS, tankers, and UAVs. Without budgetary expansion or reforms shifting resources from manpower-heavy segments, delays or reliance on imports remain probable.

There is also a strategic discussion on program consolidation—merging AMCA and TEDBF naval fighter development into a single family could save costs and pool R&D, alongside integrating it within a broader ecosystem with carriers, unmanned loyal wingmen, and advanced launch systems like EMALS. This integrated vision requires aligned budgeting and national prioritisation.

AMCA's success hinges not just on technological achievement but also on breaking structural monopolies, mobilising private sector and sovereign funding in a hybrid model, and instituting fiscal reforms to guarantee sustained funding.

India’s move toward private consortiums for AMCA is historic, breaking HAL’s monopoly and aiming to create a robust aerospace ecosystem to finally place indigenous fighters into frontline squadrons.

IDN (With Agency Inputs)