IAF's New 97 Tejas Mk1A Order Sees A 17.6% Unit Cost Increase, Reflecting Tech Upgrades and Inflation

In a major boost to India's indigenous military aviation sector, the government is set to acquire 97 additional LCA Tejas Mk1A fighter jets from state-owned Hindustan Aeronautics Limited (HAL).

Defence Minister Rajnath Singh confirmed the new procurement on August 21, 2025, with the deal estimated to be worth approximately ₹66,000 crore.

This latest order significantly expands upon a previous contract signed in February 2021, in which the Indian Air Force (IAF) procured 83 Tejas Mk1A aircraft for about ₹48,000 crore.

The back-to-back orders underscore a strong commitment to the 'Make in India' initiative, aiming to strengthen the nation's self-reliance in critical defence technology.

A financial analysis of the two contracts reveals a noticeable rise in the per-unit cost of the advanced fighter jet. The 2021 order for 83 jets priced each aircraft at an average of ₹578 crore.

In contrast, the new deal for 97 jets places the unit cost at approximately ₹680 crore. This represents a cost escalation of nearly 17.6%, or ₹102 crore per aircraft.

Several key factors are understood to be behind this price variation.

Firstly, economic inflation and disruptions to global supply chains since 2021 have led to a substantial increase in the cost of raw materials and sophisticated electronic components essential for manufacturing.

Secondly, the newer batch of Tejas Mk1A jets is expected to feature further technological enhancements over the initial models.

These upgrades likely include a more advanced domestically developed 'Uttam' AESA (Active Electronically Scanned Array) radar, a superior electronic warfare suite for improved survivability in hostile environments, and enhanced capabilities for integrating a wider array of modern weaponry.

Finally, the overall cost of such a large-scale defence procurement typically includes a comprehensive support package. This often covers essential ground support equipment, a large inventory of spare parts, and extensive training programmes for both pilots and ground crew, all of which contribute to the total contract value.

With this new acquisition, the total number of Tejas Mk1A fighters ordered for the IAF will reach 180. This fleet is projected to equip nine air force squadrons, playing a crucial role in replacing the aging MiG-21 fleet and bolstering India’s air combat strength.

The Tejas Mk1A programme, which aims for over 60% indigenous content, also strengthens the domestic aerospace ecosystem by involving key private sector firms such as Larsen & Toubro, Dynamatic Technologies, and VEM Technologies in the production of vital components like wings and fuselage sections.

 

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[sanket]

Oh, two Tejas MK1A are likely to be delivered by October 2025, waiting for the third GE-404 Engine to arrive, which missed the July and August deadlines.

 

[Mc Addy]

Tech upgrade , inflation and teriffs!!

 

[Preet]

This would be the total cost, including all the repairs, maintenance contracts, training and support, etc., etc. All-inclusive, it's $80 million per jet, so it's fine as we are building an ecosystem. As and when manufacturing processes mature, prices will go down too.

 

[Mayank393]

Hope it comes with the indegenuios radar and EW suite

 

[Kira]

Considering that the prices were substantially lowered due to COVID slump in 2020-21, it makes sense that they would rise notably by 2025 after 4+ whole years.
Plus, since a ton of Tejas components are imported, they will generally see price increases reflecting broader supply chain issues in the aviation industry.

 

[Sandeep]

After a gap of 4 years the price will definitely increase due to inflation and raw material costs. The only way to bring that down is to increase the indigenous content rate which is what they should be focusing on. We have many companies that can even reverse engineer a lot of the foreign parts and components that were imported.

 

[Ashok Kandimalla]

Oh, two Tejas MK1A are likely to be delivered by October 2025, waiting for the third GE-404 Engine to arrive, which missed the July and August deadlines.

Just a doubt. The first engine was delivered in March and 2nd in July if I am correct. If the a/c was ready 'but for the engine' why is there so much delay for deliveries, till Oct 2025? Any idea ji?