Article - PMO has initiated a push for a major revamp and restructuring of HAL

Jai Siya Ram http://www.fxlive.in/ "Article - PMO has initiated a push for a major revamp and restructuring of HAL" The Prime Minister's Office (PMO) has initiated a push for a major revamp and restructuring of Hindustan Aeronautics Limited (HAL) to significantly accelerate the delivery of fighter jets, particularly the Light Combat Aircraft (LCA) Tejas Mk1A. The need for this overhaul is driven by HAL's massive order backlog (reportedly exceeding ₹2.7 lakh crore) and persistent delays in aircraft delivery, which have caused concern in the Indian Air Force (IAF) over its dwindling combat squadron strength. 2. Specific Restructuring/Capacity Expansion Measures The restructuring aims to move HAL's operational effectiveness beyond its historical bottlenecks: Production Capacity Target: HAL is ramping up production capacity from an earlier rate of about 8-16 aircraft per year to a target of 24 aircraft annually by the 2025-26 timeframe. New Production Facilities: The increased capacity is being achieved by utilising existing lines in Bengaluru and commissioning a new production facility in Nashik, Maharashtra. Outsourcing/Private Sector Collaboration (Modular Assembly): This is a core component of the revamp. HAL is increasing the outsourcing of complex work to private Indian firms like Larsen & Toubro (L&T) and Tata Aerospace. The strategy involves outsourcing the complete assembly of major aircraft modules (fuselage, wings, etc.) to private firms. These partners will now deliver large, pre-equipped modules ready for final integration, allowing HAL to focus solely on final assembly, testing, and flight trials. This modular approach is intended to significantly cut down the final assembly time at HAL. Organizational Overhaul (Under Consideration): Reports suggest the government is considering a full-scale restructuring of HAL's organizational model for greater accountability and efficiency. A strategic plan is being developed, which could include the potential establishment of standalone, autonomous units specializing in: Fixed-Wing Aircraft Production Helicopter Manufacturing Maintenance and Repair Operations (MRO) 3. Key Bottlenecks Being Addressed The delays that prompted the PMO intervention are largely due to: Engine Supply: Delays in the timely delivery of GE F404 turbofan engines from the U.S. Action: HAL is accelerating current F404 engine deliveries and is finalizing a new contract (reportedly for 113 more engines worth over $1 billion) to ensure a steady supply for the new 97-jet order. Integration and Trials: Initial challenges in integrating advanced systems like the indigenous UTTAM Active Electronically Scanned Array (AESA) Radar and new Indian weapons onto the Tejas Mk1A platform. Action: HAL reports that these issues are near resolution, with the first two Mk1A jets expected to be delivered soon, contingent on the final weapon firing trials. Regards FXLive Chandan Singh ((Tecnical Research Analyst in MCX Commodity + Cash Equity & Future/Options ))