HAL shares in focus as India nears $1 billion jet engine deal with GE

Hindustan Aeronautics Limited (HAL) shares will be in focus on Thursday as India moves closer to signing a $1 billion agreement with US manufacturer General Electric (GE) for fighter jet engines.

The deal, now in its final stages of discussion, covers the acquisition of 113 new F404-IN20 engines to power the indigenous Light Combat Aircraft (LCA) Mk1A. According to sources, the agreement between GE and HAL is expected to be finalised by next month.

The order for 113 engines follows the Indian Air Force’s additional requirement for the LCA Mk1A, after clearance from the Cabinet Committee on Security (CCS) earlier this month.

This latest contract builds on earlier deals for the LCA programme. In 2021, India signed a $716 million agreement with GE for 99 F404 engines to power the first batch of 83 LCA Mk1A fighters ordered by the Air Force. Deliveries under that contract are underway, with HAL confirming that earlier supply chain delays at GE have been resolved. HAL is now receiving two engines per month, sufficient to support production lines capable of delivering 24 aircraft annually.

The new order for 113 engines will allow HAL to maintain continuity in its production schedule and meet the requirements for an additional 97 LCA Mk1A fighters cleared by the CCS on 19 August. The clearance formed part of a Rs 66,000 crore order placed with HAL, underscoring the government’s confidence in the indigenous combat aircraft programme.

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The LCA Mk1A variant, featuring next-generation radars, electronic warfare systems and mid-air refuelling capability, marks a significant upgrade over earlier versions. The Indian Air Force has sought additional numbers to strengthen its fighter squadron fleet, which has fallen to its lowest level since 1965.Alongside the F404 deal, negotiations are underway for a larger contract involving GE’s F414 engines, which are intended for the upcoming LCA Mk2 fighters. These engines will be manufactured in India under a technology transfer arrangement. The agreement, valued at more than $1.5 billion, provides for over 80% transfer of technology. Prototype production of the LCA Mk2 has already begun, with serial production scheduled to start by 2027. The Mk2 variant is expected to deliver longer endurance and higher weapons payload capacity compared to earlier models.India’s indigenous fighter programme also includes the planned Advanced Multirole Combat Aircraft (AMCA). In June, the government invited Indian firms to partner in the development and contribute to building prototypes of the next-generation platform.

Together, the new $1 billion F404-IN20 engine contract, the forthcoming F414 technology transfer deal, and the expanded LCA Mk1A order book mark one of the biggest pushes for domestic fighter production in recent years. For HAL, these deals significantly strengthen its role in meeting India’s long-term combat aircraft needs.

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