Govt mulls restructuring HAL to boost efficiency amid record order book: Report

India is exploring a restructuring of state-owned aerospace giant Hindustan Aeronautics Ltd (HAL) to improve efficiency and accelerate delivery of military hardware, reported The Economic Times, citing people familiar with the matter.

An external consulting firm has begun work on a roadmap to revamp HAL’s operations, including the potential creation of independent entities focused on specific areas of aeronautical manufacturing, according to the report.

Options under discussion include separate units for fixed-wing aircraft, helicopters, and maintenance, overhaul and repair, the paper said.

The move comes as HAL faces a record order book of more than ₹2.7 lakh crore, over eight times its annual revenue. The backlog includes fighter jets, utility and attack helicopters, and engines, with additional orders expected this year.

The defence ministry last week sealed a ₹62,370 crore deal with the HAL to procure 97 Tejas MK-1A light combat aircraft for the Indian Air Force. The signing of the contract came over a month after the Cabinet Committee on Security (CCS) headed by Prime Minister Narendra Modi green-lighted the mega procurement.

The delivery of the Light Combat Aircraft (LCA) would commence in 2027-28 and the supplies will have to be completed over a period of six years.

"The Ministry of Defence signed a contract with Hindustan Aeronautics Limited (HAL) for procurement of 97 Light Combat Aircraft (LCA) Mk1A, including 68 fighters and 29 twin seaters, along with associated equipment, for the Indian Air Force, at a cost of over Rs. 62,370 crore (excluding taxes)," according to an official readout.

It is the second such contract awarded to the state-run aerospace behemoth.

Delays in delivering the Light Combat Aircraft to the Indian Air Force have raised concerns over the company’s ability to meet timelines, particularly as the service grapples with declining combat strength. HAL’s heavy workload has also complicated its participation in India’s next-generation Advanced Multirole Combat Aircraft programme.

A similar restructuring proposal was considered earlier but shelved when the company’s order pipeline was smaller, ET said.