Govt plans HAL revamp to speed up defence aircraft, helicopter deliveries

The government may restructure HAL as its orders rise to ₹2.7 crore, to make the company faster and more efficient in building fighter jets, helicopters and engines for the armed forces

The government is working on a plan to revamp Hindustan Aeronautics Limited (HAL) in order to make the state-owned aerospace company more efficient and responsive to the needs of the armed forces, according to a report by The Economic Times. The move comes at a time when HAL is handling one of its largest order books, raising concerns about timely delivery of crucial aircraft and helicopters. 

A consulting firm has been tasked with studying HAL’s current structure and operations, the news report mentioned. The team has started discussions with senior management to assess the company’s functioning and identify bottlenecks. The exercise is aimed at preparing a roadmap for restructuring that can help HAL meet rising demands from the Ministry of Defence.   

HAL Order book touches ₹2.7 trillion

With the recent order for 97 Tejas fighter jets, HAL’s order book has increased to nearly ₹2.7 trillion, HAL’s CMD DK Sunil told CNBC-TV18. The pending deliveries include fighter aircraft, utility helicopters, attack choppers and engines. Additional orders are expected to be placed this year, further increasing the pressure on the company. 

Plans to restructure HAL are not new. In an earlier proposal, the idea was to split the company into three specialised entities focusing separately on fixed-wing aircraft, helicopters and maintenance and overhaul services. However, that plan was shelved because the order pipeline was not strong enough to justify such a major step. With the current surge in orders, the idea of independent verticals is once again under consideration, The Economic Times reported.

Concerns over delays and capacity

The aerospace company’s pending orders are now more than eight times its annual revenue, raising questions about whether it can meet delivery schedules. The company has already faced delays in supplying Light Combat Aircraft (Tejas), with the Indian Air Force flagging concerns about shrinking combat strength. 

The heavy backlog is also seen as a hurdle for HAL’s participation in the ambitious Advanced Multirole Combat Aircraft (AMCA) project. The programme is a key part of India’s plan to develop next-generation fighter jets, but HAL’s ability to contribute effectively may depend on how successfully it streamlines its operations through restructuring, The Economic Times reported.