Hindustan Aeronautics revamp study to be ready by March next year

Govt ropes in BCG to conduct study in view of firm's growing order book

A study on reorganising state-run Hindustan Aeronautics Ltd (HAL) will be ready by March next year, with the government engaging Boston Consulting Group (BCG) for the purpose, defence sources told Business Standard. 

The move comes in light of the company’s growing order book and is focused on platform delivery as well as meeting customer requirements, they added. 

HAL’s confirmed contracts pending or under execution stand at around ₹2.52 trillion. 

Not only is HAL India’s largest defence firm by revenue, order book, and market capitalisation, it is also the country’s only combat aircraft manufacturer at present. 

Apart from decades of licence manufacturing foreign-designed platforms like the MiG-21 and Su-30MKI, it is also producing the indigenous light combat aircraft Tejas and handling regular repair and overhaul orders. 

It has also designed and manufactured a range of military and civil helicopter variants. 

“BCG was brought in during September to study ways to reorganise HAL,” said one of the sources. They added that the move was initiated by the Ministry of Defence’s Department of Defence Production, which oversees all of the country’s 16 defence public sector undertakings (DPSUs), including HAL. 

The source added that BCG has been given until March 2026 to submit its study. 

The proposed reorganisation aims to improve HAL’s platform delivery efficiency, sharpen its product focus, and enhance customer responsiveness, the sources said. 

In what could be the first substantive challenge to its monopoly in combat aircraft manufacturing, HAL is competing with a clutch of private-sector contenders to qualify for building prototypes of the Advanced Medium Combat Aircraft (Amca). 

However, its expansive order book has proved to be a challenge, with one of the criteria in the expression of interest issued by the Aeronautical Development Agency, the Amca’s design agency, stipulating that companies would receive zero marks out of 100 if their order book was three times their turnover. 

HAL’s order book is over eight times its FY25 turnover of ₹30,105 crore. Its FY25 order book alone accounted for 37.14 per cent of the combined value held by all nine original, or ‘old’, DPSUs, according to the Standing Committee on Defence’s March 2025 report. 

The seven ‘new’ DPSUs were created in October 2021 through the corporatisation of the Ordnance Factory Board. 

HAL is yet to begin deliveries of the 83 Tejas Mark-1A (Mk1A) jets, contracted for ₹36,400 crore in February 2021, to the Indian Air Force. It is also executing a ₹62,700-crore order placed in March 2025 for 156 Prachand Light Combat Helicopters. 

In September, HAL received a follow-on order for a second tranche comprising 97 Mk1A aircraft at a cost exceeding ₹62,370 crore. Deliveries are expected to begin in 2027–28 and conclude over six years.