Why GE's deal with HAL is a game changer for Indian defence

Prime Minister Narendra Modi meets General Electric CEO H. Lawrence Culp Jr, in Washington, USA, Wednesday

For the first time ever, India and the US have agreed to jointly manufacture an engine for India’s homegrown fighter aircraft programme, in India.  

The Boston-headquartered General Electric (GE) announced on Thursday that it has signed a Memorandum of Understanding (MoU) with Hindustan Aeronautics Limited (HAL) to produce jet engines for the indigenously developed Light combat aircraft (LCA), Tejas Mk2, that are being built by HAL, with the potential to jointly produce GE Aerospace’s F414 engines in India.

The much-anticipated announcement was made during Prime Minister Narendra Modi’s state visit to the US and is seen as a significant milestone in strengthening the defence cooperation between the two countries.

“This is a historic agreement made possible by our longstanding partnership with India and HAL,” Lawrence Culp, Jr, chairman and CEO of GE, and CEO of GE Aerospace, said. “We are proud to play a role in advancing President Joe Biden and Prime Minister Modi’s vision of closer coordination between the two nations. Our F414 engines are unmatched and will offer important economic and national security benefits for both countries as we help our customers produce the highest quality engines to meet the needs of their military fleet.”

GE had begun working with the Aeronautical Development Agency and HAL as part of the LCA project in 1986. The company’s F404 engines have been used to power the Tejas Mk1A aircraft currently in use by the Indian Air Force. In all, 75 F404 engines have been delivered and another 99 are on order for the Tejas Mk1A. Eight F414 engines have been delivered as part of an ongoing development programme for LCA Mk2. To date, more than 1,600 F414 engines have been delivered globally.

HAL is set to manufacture 83 Tejas Mk 1A aircraft, while also starting the design and development phase for the Tejas Mk2 aircraft. The Mk1 A is designed as an interim aircraft between the Mk1 and Mk2, with features such as air-to-air refuelling, advanced avionics, and electronic warfare suites. HAL plans to complete the delivery of the Mk1 A by 2028 with an ambitious target of inducting the Mk2 by the same year.

“The deal for licence production of the GE F414 engine is extremely significant for India as it paves the way for the establishment of infrastructure and creates an entire vendor ecosystem to support the production as well as testing of the F414 engines within India,” Abhijit Apsingikar, defence analyst at London-based consultancy firm GlobalData, tells Forbes India.

Also read: Make in India: How HAL is gearing up to deliver

The deal between HAL and GE could involve, at least during the first few years, production being limited to the assembly of semi-knocked-down kits (SKD) and completely knocked-down kits (CKD), before a gradual expansion within India. “The percentage of domestically produced components is anticipated to progressively increase by as much as 80 percent over the next decade,” adds Apsingikar.

The Tejas Mk 2 is essential to the Indian Air Force’s plan to ramp up its squadron strength and is expected to be inducted in a relatively large volume. Currently, HAL is planning to ramp up its production of the Mk1A variant from eight aircraft a year to 16, which could go up in the final year of delivery. The Indian Air Force wants to build six squadrons of the Tejas Mk 2 and the prototype is expected to be tested in 2026.

Light combat aircraft (LCA), Mk1A. Image: Reuters

“These aircraft are likely to serve as the backbone of the IAF fighter fleet, with LCA Mk 2 replacing several different aircraft types such as Mirage 2000, MiG-29, and Jaguar ground attack fighters over the coming years,” says Apsingikar.

The landmark deal, a first-of-its-kind, will also mean that GE is now gearing up to create a family of products in the country, including building for the Advanced Medium Combat Aircraft (AMCA). HAL is looking to sell over 100 Tejas Mk-2 jets and another 126 jets of the advanced medium combat aircraft (AMCA) in addition to manufacturing 100 twin-engine deck-based fighters for the Navy.

“With the projects which are lined up for the next 10 to 15 years, the country will become more self-sustainable and self-reliant,” CB Ananthakrishnan, chairman and managing director of HAL, had told Forbes India.

HAL is also currently looking to manufacture the Indian Multi-Role Helicopter (IMRH), a medium-lift helicopter, that can effectively replace the ageing Mi-17 helicopters and can be used for air assault, air-attack, anti-submarine, anti-surface, military transport, and VIP transport roles. The company has already signed a workshare agreement for the joint development of engines with France-based Safran.

Also read: GE Aerospace's soaring ambitions in India

“Today’s agreement will advance GE Aerospace’s earlier commitment to build 99 engines for the Indian Air Force as part of the LCA Mk2 program,” GE said in a statement. “It puts the company in a strong position to create a family of products in India, including the F404 engine that currently powers the LCA Mk1 and LCA Mk1A aircraft and GE Aerospace’s selection for the prototype development, testing, and certification of the AMCA programme with our F414-INS6 engine. In addition, GE will continue to collaborate with the Indian government on the AMCA Mk2 engine programme.”

India is expected to spend a staggering $130 billion over the next seven years as part of its plan to modernise its military, which has long suffered for reasons ranging from poor planning, allegations of corruption, and a serious mismatch between strategic objectives and purchasing technology. In the current year alone, the capital outlay for defence modernisation and infrastructure development is pegged at Rs1.63 lakh crore with indigenisation and domestic manufacturing at the heart of it.

The government has been attempting to reform the defence procurement and production process, and put nearly 2,000 items, including sub-systems, components, spares, and line replacement units, into a list that bans their imports. Additionally, the government is also allowing for the transfer of technology between the government’s premier defence agency, DRDO, and the private sector.

For HAL, meanwhile, the deal could be a shot in the arm, as the Bengaluru-headquartered company looks to ramp up on its offerings within the country. 2023 is the first year in decades that the company’s licenced production is limited to a single aircraft, the 19-seater DO-228 aircraft, after it completed the manufacturing of Sukhoi Su-30 MKI and has instead turned all its attention to manufacturing its own indigenous products ranging from the Tejas fighter aircraft to four different types of helicopters while also designing and developing a new range of helicopters and fighter aircraft.

“Although HAL has previously licensed the manufacturing of AL-31 engines, the manufacturing of a relatively modern western engine such as the GE F414 enables HAL to build up competencies to service and overhaul these engines within the country,” says Apsingikar.

The deal between HAL and GE comes almost eight months after the Indian government announced a deal between French aircraft manufacturer, Airbus, and Mumbai-headquartered Tata Advanced Systems Limited (TASL), which will see a military aircraft being made in India for the first time by the private sector. The deal between TASL and Airbus to sell the aircraft, worth Rs21,000 crore, was signed and approved by the government in September last year.

TASL, in partnership with Airbus, will make 40 Airbus C295, a new-generation tactical airlifter that’s meant to replace the ageing fleet of the Avro Hawker Siddeley HS-748 twin-turboprop aircraft, which has been in service with the Indian Air Force since the early 1960s. Airbus will sell 16 aircraft in fly-away condition within four years while the remaining 40 will be manufactured and assembled by TASL in its new facility in Vadodara, Gujarat. Additionally, TASL will also provide MRO (maintenance, repair, and operations) support and service for the 56 aircraft, which by itself provides an avenue for future revenues.

“The process of creating infrastructure will involve progressively outsourcing sub-components and spare parts to the private sector, which will likely enhance the competencies of private vendors,” adds Apsingikar of Global Data. “As private vendors develop their competencies to produce spare parts and components, that expertise could be transferred to also support the development of indigenous turbofan jet engines over the coming decades.”

Meanwhile, the deal could also pave way for the Indian government looking to induct some US-built fighter aircraft that have long been passed over by the Indian government. The last time the government made a significant foreign purchase was in the case of 36 Rafale aircrafts.

“The F414 engine deal may also ease the Indian government’s concerns over the US as a strategic defence partner and could even pave the way for the induction of US fighter jets,” says Apsingikar. “This will go a long way toward diversifying India away from Russian defence equipment and solidifying the Indo-US partnership.”