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.

 

[parimal vaikuthray Pandya]

Poor fellow of getting options neither to get proper implementation of the contract nor able to get any action on breach of the contract nor able to get production indigenously

 

[kinzelle]

India doesn't even have the power to claim the penalty, instead beg ge for engines. Atmanirbharta fantasies.

 

[Srinivas Nirmal Kumar Avula]

These delays are nothing new its like arm twisting India to submit to US dictates.

 

[VedantaKiran]

If they are serious they should go for Tejas MK2 engine with France or Russia engine America not gonna give us anything this is just pressure tactics to delay

You are spot on. If India is ready to buy Su-57 for the short term to overcome the delays in Mk1A delivery, why not integrate the Mk1A with Russian engines or French Safran Engines? HAL is bloody naive to still expect GE & Americans to keep their word.

 

[ganes ponnusamy]

Dont blame GE. Blame the US govt for blocking the delivery of engines.US companies abide by the rules and laws the govt imposes on them. You cant blame the goose for not laying eggs. The owner ie. the govt controls its activities and denying the supply. Dont blame the goose but blame the govt.

 

[Karveer]

You are spot on. If India is ready to buy Su-57 for the short term to overcome the delays in Mk1A delivery, why not integrate the Mk1A with Russian engines or French Safran Engines? HAL is bloody naive to still expect GE & Americans to keep their word.

It would be naive to presume that the decision makers , haven't factored these contingencies. Going all along in new negotiations , wouldn't cut short the delays.. instead investments till date would be wasted , while it would still delay the deliveries , not to speak of retaliatory , US moves. The GE engine is a time tested machine , and TOT aggreement was hammered after much background works.

 

[ganes ponnusamy]

Indian defence planners are to be blamed for any problem in delivery.They should have a second option ready when the first option is not delivering the goods. Sack some defence planners in the defence ministry and things will be back to normal soon.

 

[Sridhar]

These delays are nothing new its like arm twisting India to submit to US dictates.

I don't think there is anything sinister on the delay. Both GE and US have made it clear that there arev issues with their SCM and they have taken measures to set straight the process.
No company of the stature of GE would resort to blackmailing and stand to loose billions of dollars worth of business.

 

[Sridhar]

Dont blame GE. Blame the US govt for blocking the delivery of engines.US companies abide by the rules and laws the govt imposes on them. You cant blame the goose for not laying eggs. The owner ie. the govt controls its activities and denying the supply. Dont blame the goose but blame the govt.

US Govt have not blocked any sales.
They continue to pitch F21, C130 j and Stryker APC.
Do you think US will stop engine sales and push other products? What logic is this?

 

[Sridhar]

Indian defence planners are to be blamed for any problem in delivery.They should have a second option ready when the first option is not delivering the goods. Sack some defence planners in the defence ministry and things will be back to normal soon.

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

 

[kurtwallis wallis]

That will delay development of Tejas by further 10 to 15 years.

Really not joking, if HAL wants to do it with ACM and MoD's support; then very easily they can deliver an ORCA jet of Tejas-TEF-Naval to IAF in less than 10 years using twin engines of RD33MK Sea Wasp.. Even IN can use same jet also!!

 

[kurtwallis wallis]

USA will never give HAL GE engines until MRFA tender is closed for F21 jets period! So, forget about ADA HAL combo programs of Tejas AMCFA ORCA TEDBF for next 20 years until Safran-Kavery 120 KN engines are developed fully... By then ww3 nuke wars would have started in a big HUGE way...

 

[Shiva]

If delay fines are taken into application, then this factor will affect profit and supply priorities of GE will be adjusted giving increased priorities to reduce delays. Indian nature of ethics are like human ethics and US companies does not follow language of human ethics but company ethics which are purely profit / loss oriented. SO, India is shwing its foolishness by not applying delay fines.

 

[divine]

If they are serious they should go for Tejas MK2 engine with France or Russia engine America not gonna give us anything this is just pressure tactics to delay

it's too late to change engines now, it would further delay the Tejas program, and this program must move forward to mature! but it is clear that GE must make a serious effort for delivery because it is not acceptable to have so much delay, it is the future of the Indian air force.

 

[Sangram]

If they are serious they should go for Tejas MK2 engine with France or Russia engine America not gonna give us anything this is just pressure tactics to delay

 

[V K Singh]

Go for alternate source of Aero- engine for production in India. Relying one one source will always end to disadvantages. Negotiation with France, Russia, England and any other sources with TOT agreement will always to advantageous .

 

[Rinku Pandey]

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.

 

[R. Singh]

We must ink deal to make GE-404 engines along with GE-414 engines here in India we may plan 300+ Tejas-1A fighters !

 

[Apocalypse gupta]

Well, HAL itself delivery every time. So, it would be deeply ironic and hypocritical if it imposed penalities on GE for delays, since it itself has never been penalised for delays.

 

[Sandeep]

If delay fines are taken into application, then this factor will affect profit and supply priorities of GE will be adjusted giving increased priorities to reduce delays. Indian nature of ethics are like human ethics and US companies does not follow language of human ethics but company ethics which are purely profit / loss oriented. SO, India is shwing its foolishness by not applying delay fines.

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.

 

[Rinku Pandey]

If they are serious they should go for Tejas MK2 engine with France or Russia engine America not gonna give us anything this is just pressure tactics to delay

That will delay development of Tejas by further 10 to 15 years.

 

[Aravind Raveendran]

This is not a good precedent, There need to be clauses of punishment for not complying with the deal made by the both parties. It's not fair when the customer should suffer for whatever reason ( except maybe cases like a pandemic or natural calamities.

 

[Raja Raja Cholan]

Indian defence planners are to be blamed for any problem in delivery.They should have a second option ready when the first option is not delivering the goods. Sack some defence planners in the defence ministry and things will be back to normal soon.

Correct. An organisation like HAL it's top managers should have a well thought ahead alternative contingency plan in place in every aspect of a project. The numerous delays in HAL projects are their own doings.

 

[Sandeep]

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.

 

[vyoma]

Well, HAL itself delivery every time. So, it would be deeply ironic and hypocritical if it imposed penalities on GE for delays, since it itself has never been penalised for delays.

Delays will happen.. that's a different topic. Don't screw up yourself with hypocrisy. Contract is a contract. Fu(ked up is India not funding and managing kaveri well. Stop blaming, but start fixing things

 

[PKPRS]

Really not joking, if HAL wants to do it with ACM and MoD's support; then very easily they can deliver an ORCA jet of Tejas-TEF-Naval to IAF in less than 10 years using twin engines of RD33MK Sea Wasp.. Even IN can use same jet also!!

this is the best option or AL41F1 engine.

 

[Muthu.Kumar]

I smell something seriously wrong here.

First blunder was to choosing GE, despite its past history of backstabbing, betraying and renouncing at crucial stages.

Second blunder is choosing GE, when much better, I mean, WAY TOO MUCH BETTER, alternatives were on the table.

For instance, Rolls Royce and Safran offered 100 % TOT. And France even offered the entire ownership including intellectual property rights to India.

I'm sure Russia's engine must the state of the art, akin to that of GE, RR and Safran. And we always have a better relationship and leverage with Russia and it would have offered a similar deal.

So with all these superior options were available for us to consider, why should have signed with GE, that too Govt - Govt ?

And now, due to its delays, Tejas is delayed, endangering India's security. If GE is let go scot free and not held accountable‌, I'm so flabbergasted. Is GE having THAT much of influence on India, that India is so timid and so scared to exercise it's legal contractual obligations ?

In a similar situation, would any US company have similarly waived off the penalty clause against an Indian company ?