HAL Waives Contractual Penalties on GE for Delaying F-404 Engines of Tejas Mk1A by 10 Months, Eyes Long-Term Cooperation

Hindustan Aeronautics Limited (HAL) has opted to waive contractual penalties on GE Aerospace for a significant delay in the supply of F-404 engines crucial for India's Tejas Mk1A fighter jet program.

Despite a nearly 10-month delay in deliveries, HAL has chosen to prioritize the strategic relationship and future collaborations with GE Aerospace over immediate financial recourse.

A 2021 contract stipulated the delivery of 99 F-404 engines by GE Aerospace to power the Indian Air Force's Tejas Mk1A fleet. However, supply chain disruptions have hampered GE's ability to meet its delivery schedule.

Sources close to the program reveal that HAL's decision to forgo penalties stems from a desire to maintain a strong partnership with GE, particularly in light of future engine requirements for the Tejas Mk1A and the upcoming Tejas MkII program.

While no engines have been delivered to date, GE Aerospace has assured HAL that deliveries will commence this month, with an accelerated schedule planned to compensate for the delays. The company aims to ramp up production significantly by 2026 to meet the growing demands of both Tejas programs.

Global supply chain disruptions, a major factor contributing to the delays, have impacted the entire aerospace industry. The scarcity of critical materials has affected manufacturers worldwide, with other engine manufacturers also facing challenges in meeting production targets. This context likely played a role in HAL's understanding of the situation.

This decision reflects HAL's long-term vision, as it seeks to secure a stable supply of engines and potentially negotiate technology transfer agreements for the more advanced F-414 engines, also produced by GE.

Local manufacturing of the F-414 engines in India under a transfer of technology (ToT) agreement is a key aspiration for HAL, and imposing penalties on GE could jeopardize these negotiations.

HAL remains confident that the Tejas Mk1A program will recover quickly, with GE's commitment to expedited deliveries. The Tejas Mk1A is a critical component of India's air defense strategy, and its successful deployment remains a top priority for both HAL and the Indian Air Force.

 

[Akshat]

I agree with you to an extent.
The Defence planners should ideally have Plan A and Plan B ready.

F404 is the second option. First was Kaveri

 

[Sunil Choan]

Good decisions by GOI. Without GE engines mk1A, 2 won't fly. Even intial AMCAs are set to use F414 engines. I think even 5th generation engine development will go to GE once Dooland Trump comes to power although India should go with RR or Safran.

Current engine should be mounted on any suitable fighter and tried out

 

[Varaaah]

By fining GE it will lead to more delays as they will go to court to fight against the fine which leads to more costs for us by getting lawyers and courts involved. Also it will ruin any future orders like the F414 engines or they can create problems to delay any key parts for any of the engines.

Perhaps. But Western companies never hesitate to go to court if they see a breach of clause. So, HAL must go ahead with the fine or it will never be taken seriously. As for the engines, they will be delayed anyway and will only harm US business in India if the Americans delay it further.

 

[Muthukumar Ponnambalam]

India shouldn’t fine GE as this will just lead to more problems, costs and headaches. If we fine GE then they will go to court straight away to contest that fine to either delay paying or pay much a very low amount. Another issue is that it can derail our purchase and negotiations for the F414 engine and delay supplying many crucial parts and technology.

GE is not the only source. Safran and Rolls Royce offered 100 % TOT. Esp. France's offer is much better, like surrendering entire ownership to India with no strings attached.

 

[Muthukumar Ponnambalam]

Seriously, I couldn't comprehend why India chose GE, that too Govt - Govt contract, knowing fully well the past history of GE giving up on us in the middle of the way, backstabbing and betraying.

Esp. when there were much better offers from France and Britain were on the table.

Did GE lock India on something ?

 

[Bhupesh Desai]

India should go for a alternate and impose heavy penalty so this non-sense stops from this American company. India needs to go for Russian AL-41F alternative and impose heavy penalty for GE.

 

[Varaaah]

India shouldn’t fine GE as this will just lead to more problems, costs and headaches. If we fine GE then they will go to court straight away to contest that fine to either delay paying or pay much a very low amount. Another issue is that it can derail our purchase and negotiations for the F414 engine and delay supplying many crucial parts and technology.

So you agree with continuous blackmail by US companies? It is exactly this what HAL must end by fining GE. Give a strong signal that if GE refuses to pay, their business in India is finished for ever

 

[Sandeep]

GE is not the only source. Safran and Rolls Royce offered 100 % TOT. Esp. France's offer is much better, like surrendering entire ownership to India with no strings attached.

For Tejas MK2 they need the F414 engine as it’s been designed based on those specifications. For the AMCA we can develop a brand new engine with Safran with 100% ToT but that will take at least 10 years to develop so we have no alternative other than GE.

 

[Sandeep]

So you agree with continuous blackmail by US companies? It is exactly this what HAL must end by fining GE. Give a strong signal that if GE refuses to pay, their business in India is finished for ever

The problem is that if we fine them then they can refuse the F414 engine deal and Tejas MK2 project will be delayed even further and we need the squadrons. They can also blackmail us by delaying the F404 engine delivery. Thanks to our armed force complaining about any Russian weapons and technology developed is absolute junk well this is the repercussions for their desperate need to buy anything western and rely on them.

 

[BCharlie]

India shouldn’t fine GE as this will just lead to more problems, costs and headaches. If we fine GE then they will go to court straight away to contest that fine to either delay paying or pay much a very low amount. Another issue is that it can derail our purchase and negotiations for the F414 engine and delay supplying many crucial parts and technology.

Regardless what we do .. penalise with fines or take them to court.. till that is settled the way they want.. all cooperation, supplies & eqpt of GE & its affiliates will be frozen till settlement.. After that all GE material will be sold to us at double the price keeping such actions in mind covering their costs & profitability...

 

[BCharlie]

India should go for a alternate and impose heavy penalty so this non-sense stops from this American company. India needs to go for Russian AL-41F alternative and impose heavy penalty for GE.

Okay, if that happens, and its with a big IF; You think then Russian company will not double its prices ?? They will deliver on time but we will end up paying double.

 

[rsingh2208]

Americans are notorious for violating defense contracts and being unreliable for supply of spares and servicing of defense platforms validly exported from US. In my June 2023 article in TheWire in the portion 'India's Concerns' I had warned against breach of contract and supply of spares.

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[VedantaKiran]

There is a contrarian article released today 30-Oct-2024 which reports that HAL has imposed many penalties on GE. So which article is true?