Tata, Kalyani not likely to tie up with HAL for Amca race; L&T picks BEL

Tata Advanced Systems (TASL) and Kalyani group are leaning towards not tying up with state-owned Hindustan Aeronautics (HAL) as they prepare to qualify for developing the prototype of India’s first indigenous stealth fighter jet — the Advanced Medium Combat Aircraft (AMCA), sources told Business Standard. 

With Larsen & Toubro (L&T) on Wednesday announcing its tieup with state-run Bharat Electronics (BEL), sources added that the only other very large private-sector players who remain potential candidates for a tieup with HAL are Adani group and Mahindra group. The government intends the AMCA programme to serve as a pathway for setting up a parallel fighter jet production line. 

Highlighting that a substantial number of private companies have approached HAL, sources said that the two- or three-party consortium (the maximum permitted) that HAL is expected to lead in pursuing the AMCA programme could take one of two forms. Either the defence public sector undertaking (DPSU) will team up with one of the four or five largest private firms still in play alongside a smaller company, or it may choose to tie up entirely with smaller players — with the likes of Dynamatic Technologies and VEM Technologies being likely candidates in that category. In response to an emailed query, HAL declined to comment on the matter. 

Sources also said that while attempts at tieups were made among the largest private-sector players, these ultimately did not go through. 

The major contenders have finished shaping their strategies ahead of the September 30 deadline to respond to the expression of interest (EoI) for AMCA prototype development, issued in June by the aircraft’s design agency — the Aeronautical Development Agency (ADA). 

The EoI followed the Ministry of Defence’s late-May approval of an execution model that gives both private and public Indian defence firms equal opportunity to compete for the AMCA programme — whether independently, as joint ventures (JVs), or as consortia. This marks a departure from long-standing convention and is seen as the first concrete opportunity to break HAL’s monopoly in combat aircraft manufacturing — a sector where it has served as the default domestic production agency — and potentially open the door to a private-sector fighter jet producer.

 

“The ADA EoI is just the qualification stage. No request for quotation has been issued. A number of players want to qualify and then see which way the government goes if it wants a parallel production line in the private sector,” said sources.

 

In a July interview, HAL Chairman and Managing Director D K Sunil said some of the EoI’s evaluation criteria were weighted against the DPSU. Specifically, companies receive zero marks out of 100 if their order book is 3x their turnover. He also noted that bidding solo, rather than as part of a JV or consortium, would result in a loss of points. Sunil further argued that the logic of having two competing players in combat aircraft manufacturing was unsound, given the modest projected order volumes.

 

Another stipulation requires that, in a JV or consortium, the lead company’s stake cannot exceed 50 per cent.

 

“The EoI’s clauses appear designed to ensure that even if a parallel production line does not emerge to break HAL’s monopoly, it cannot bid solo, and greater private-sector participation will still be secured — aligning with the government’s goal of strengthening public–private partnership in defence,” said sources.

 

HAL is not the only DPSU positioned to join the programme. Kalyani group, which sources said will lead a three-party consortium, is in advanced talks with a major DPSU and an electronics company. Meanwhile, L&T is participating as part of a two-party consortium, with a tie-up with aerospace and defence electronics DPSU BEL.

 

“The partnership will leverage L&T’s expertise in developing strategic defence and aerospace platforms, along with BEL’s experience in defence electronics and systems, to jointly contribute to India’s fifth-generation fighter aircraft,” said a company release announcing the strategic partnership with BEL.

 

The sources said that TASL may bid independently, perhaps banking on its October 2024 milestone of establishing India’s first private-sector military aircraft manufacturing facility — the final assembly line for the Airbus C295 transport aircraft for the Indian Air Force. The company is also setting up a production facility in Hyderabad, Telangana, to manufacture the Rafale combat aircraft fuselage — for both domestic and global markets — under a tieup with France’s Dassault Aviation.

 

Whichever company wins the contract for AMCA prototype development and production (five jets) will be the natural choice for series production of the final platform, as indicated by the EoI, which requires shortlisted entities to possess the capability to establish a manufacturing facility for the purpose.