Leveraging C-295 and Tejas Experience, TASL and L&T Leading the Race for AMCA 5th-Gen Fighter Production

In a major development for India's indigenous defence capabilities, private sector giants Tata Advanced Systems Limited (TASL) and Larsen & Toubro (L&T) have emerged as the frontrunners to lead the manufacturing of the nation's futuristic fifth-generation stealth fighter, the Advanced Medium Combat Aircraft (AMCA).

Their strong positioning highlights a strategic shift towards greater private industry participation in flagship military projects.

The AMCA programme, which recently received formal approval from the Cabinet Committee on Security (CCS) with an initial budget of approximately ₹15,000 crore for the design and prototype development phase, is central to modernising the Indian Air Force (IAF).

Developed by the Aeronautical Development Agency (ADA) under the Defence Research and Development Organisation (DRDO), the AMCA is a 25-tonne, twin-engine, multi-role aircraft.

It is designed with advanced features, including stealth technology to evade enemy radar, supercruise capability for sustained supersonic flight without using fuel-guzzling afterburners, and highly integrated avionics, placing it in the same category as the American F-35 and Russian Su-57.

The IAF has projected a requirement for at least 125 AMCA jets, with the first flight targeted for 2028-29 and official induction into service anticipated by 2035.

The involvement of established private firms like TASL and L&T is considered essential to complement the capabilities of the state-owned Hindustan Aeronautics Limited (HAL) and meet the complex manufacturing demands of a fifth-generation fighter.

Tata Advanced Systems Limited, a key aerospace and defence arm of the Tata Group, has built a formidable reputation. The company is already executing a landmark project to manufacture the C-295 tactical transport aircraft for the IAF in partnership with Airbus at its facility in Vadodara. This makes TASL the first private Indian company to build a complete military aircraft.

Furthermore, its collaboration with France's Dassault Aviation to produce the entire fuselage for the Rafale combat jet at its Hyderabad facility underscores its proficiency in handling complex, high-precision aerospace manufacturing.

Similarly, the engineering conglomerate Larsen & Toubro brings extensive and complementary expertise to the table. L&T has been a critical partner in the production of India's indigenous Tejas Mk-1A Light Combat Aircraft, manufacturing vital components like the wings and tail assemblies for HAL.

The company's vast experience in precision engineering, advanced composite materials, and managing large-scale projects is demonstrated through its contributions to the Akash air defence missile system, the Pinaka rocket launcher, and the construction of naval warships and submarines.

As the programme moves towards the production phase, a key question remains regarding the collaboration model. It is not yet clear if TASL and L&T will form a joint consortium to execute the massive project or if they will compete for separate work packages.

A consortium could create a powerful synergy by combining TASL's aircraft integration experience with L&T's deep engineering strengths, a model often preferred for managing risk and ensuring efficiency in large defence programmes.

Alternatively, competition between the firms could foster innovation and cost-effectiveness. The final structure will be determined by the Ministry of Defence based on production capacity, cost, and the overarching goal of maximising indigenous content.

 

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[pgahlot]

Both of these must be included in making AMCA if we want to make these timely. As HAL can't do it alone.

 

[sanket]

Good. They should come together instead of blaming each other if they fail to clinch the deal by bidding solely or independently or competing against each other.

 

[Flanker]

Great. Don’t let HAL come anywhere near AMCA.

 

[king dorm]

Without private Indian manufacturers, the AMCA project will take double the estimated time. This is a good step.

 

[Arz786]

Both Tata and L&T are capable of making aircraft structures, harnesses, control panels, and can do final assembly. Altogether, these will account for 15-20% of the AMCA value chain. Unlike HAL, these private companies will not be able to troubleshoot during certification, upgrade of avionics or other subsystems or weapon integration because they do not have that capability—neither will they invest in such capabilities because of limited return on such investment. Such troubleshooting, certification, upgrade, and integration will have to be done by ADA. In the private sector, what we are hoping for is a better and more efficient production organization. This expectation should be clear.

 

[APJ]

Both Tata and L&T are capable of making aircraft structures, harnesses, control panels, and can do final assembly. Altogether, these will account for 15-20% of the AMCA value chain. Unlike HAL, these private companies will not be able to troubleshoot during certification, upgrade of avionics or other subsystems or weapon integration because they do not have that capability—neither will they invest in such capabilities because of limited return on such investment. Such troubleshooting, certification, upgrade, and integration will have to be done by ADA. In the private sector, what we are hoping for is a better and more efficient production organization. This expectation should be clear.

Limited ROI? Are you kidding? Defence is one of the most profitable sectors of all. Stop seeing a jet as one product. It's an ecosystem, and anything related to it is profitable.

Why do you think war happens? Hostility? Sure. But they don't drag out because of hostility alone; the war weapon sellers don't want the war to stop.

 

[Radha Ramanan]

Actually, the Hyderabad-based VEM Technologies was the one that had built the exact scale model of the AMCA in the Aero India show. They have the closest interaction with ADA, etc. A lot of technical drawings were shared with them as well. A lot of tooling and jigs have been developed by them as well for the AMCA. I do not know what to make of this news; it could be anything, as VEM is also making sections of the LCA currently along with other industrial houses. It would be wiser to bring a lot of big industries together, as this is going to be a mega project, and the costs are going to be massive and cannot be afforded by one or two companies. There are idiotic conditions that are put forth by the government for tenders that only favour large business houses. Lesser-known houses that are very capable with tech and manpower but not finances will be left out.

 

[Arz786]

Limited ROI? Are you kidding? Defence is one of the most profitable sectors of all. Stop seeing a jet as one product. It's an ecosystem, and anything related to it is profitable.

Why do you think war happens? Hostility? Sure. But they don't drag out because of hostility alone; the war weapon sellers don't want the war to stop.

Yes, limited ROI in Indian private sector context. Because it requires investment with uncertain outcome. Uncertainty brings down probability weighted ROI. No Indian private sector board will allow investment without near certain return that can beat stock market return. Hence their investment in R&D is 0.1% of their revenue while US defence companies invest upwards of 5% of their revenue into R&D.

Factors that you have referred to are applicable in case of Western Defence companies with established capability and track record. Large Indian private defence companies focus on assembly of foreign products or become supplier of relatively low tech components to global OEMs ? because that provides certainty. They will any day opt for low but certain return rather than high but uncertain ones. To be fair to Indian large private companies, they did try to invest in developing new product in the past, but failed and that failure has conditioned their culture to avoid risky investments.

 

[Sandeep]

Most of the manufacturing will be done by the private sector and HAL will most likely assemble and integrate it all together. HAL will still exclusively manufacture some equipment and technology like the engines as they have the experience.

What the industry needs to do is get ready to build the new facilities or renovate existing facilities, buy new machines, develop the technology, get a reliable and continuous supply of raw materials and have a reliable and skilled workforce with experience who knows what they are doing.

All of this should be setup before a contract is signed and not only after it’s signed as this will easily add 2-3 years of delay in setting up the facilities. Whoever wins the contract should get a letter of intent which protects the manufacturing company and they will receive assurances that orders will be placed with them so they should get their facilities ready before a contract is signed and orders are given.

 

[Akshat]

Yes, limited ROI in Indian private sector context. Because it requires investment with uncertain outcome. Uncertainty brings down probability weighted ROI. No Indian private sector board will allow investment without near certain return that can beat stock market return. Hence their investment in R&D is 0.1% of their revenue while US defence companies invest upwards of 5% of their revenue into R&D.

Factors that you have referred to are applicable in case of Western Defence companies with established capability and track record. Large Indian private defence companies focus on assembly of foreign products or become supplier of relatively low tech components to global OEMs ? because that provides certainty. They will any day opt for low but certain return rather than high but uncertain ones. To be fair to Indian large private companies, they did try to invest in developing new product in the past, but failed and that failure has conditioned their culture to avoid risky investments.

Even in Indian defense context, HAL has a profit margin of 27%. That's humongous. For context, Maruti has a margin of 9%, Tata Steel has a margin of 3%, Tata motors stands at 7%. Zomato stands at 3%, Paytm at about 12%. So even the 'market uncertainty' argument doesn't work as start ups are far more uncertain when compared to direct tenders from GoI. Orders from GoI is certain. Profits on them are guaranteed.

So no, Indian companies (not differentiating between defence and other sectors as money is money) do not hesitate from risk and Defense is a sector where risk reward ratio is hugely favorable.

 

[Akshat]

Actually, the Hyderabad-based VEM Technologies was the one that had built the exact scale model of the AMCA in the Aero India show. They have the closest interaction with ADA, etc. A lot of technical drawings were shared with them as well. A lot of tooling and jigs have been developed by them as well for the AMCA. I do not know what to make of this news; it could be anything, as VEM is also making sections of the LCA currently along with other industrial houses. It would be wiser to bring a lot of big industries together, as this is going to be a mega project, and the costs are going to be massive and cannot be afforded by one or two companies. There are idiotic conditions that are put forth by the government for tenders that only favour large business houses. Lesser-known houses that are very capable with tech and manpower but not finances will be left out.

These are not 'idiotic' conditions but safeguards. Think of this. Lets say AMCA works and develops into a world class product. But the company that made it goes bankrupt before orders can come in. Is that not a security risk? You can be 100% certain that someone like L&T or Tata can hanle it and there won't be any risks of leakage etc. Can you say that about a start up? That's why financial conditions are included in such contracts. Tata or L&T can then subcontract the work to them, to ensure liquidity as well as talent. Or they can directly hire better talent. That's easier to do than money.

 

[Kira]

A consortium of private firms is needed for both aircraft development as well as aero engine production.

 

[APJ]

Yes, limited ROI in Indian private sector context. Because it requires investment with uncertain outcome. Uncertainty brings down probability weighted ROI. No Indian private sector board will allow investment without near certain return that can beat stock market return. Hence their investment in R&D is 0.1% of their revenue while US defence companies invest upwards of 5% of their revenue into R&D.

Factors that you have referred to are applicable in case of Western Defence companies with established capability and track record. Large Indian private defence companies focus on assembly of foreign products or become supplier of relatively low tech components to global OEMs ? because that provides certainty. They will any day opt for low but certain return rather than high but uncertain ones. To be fair to Indian large private companies, they did try to invest in developing new product in the past, but failed and that failure has conditioned their culture to avoid risky investments.

No sir, ROI isn't bad. Private sectors haven't touched the ceiling yet.

ROI in the defence sector doesn't come from small investments and wanting immediate returns. For even a hundred failures, it takes just one niche cutting-edge product to get your return. And of course, the government plays a big part because you need to provide them with enough cushion for failures.

And just because they are risk-averse and want a certain outcome doesn't mean that ROI is bad in defence. It just means they have a very low risk appetite, unlike their Western counterparts who are open to taking risks. Lockheed Martin wasn't built in a day, and even they needed to be bailed out by the US government.

And the R&D in defence has a trickle-down effect. So, ROI is there; the private sector is just risk-averse.

 

[ASHOK CARROL]

The consortium must also be involved in the manufacture of Tejas Mk-2 so that the skilled manpower is geared up for the more modern AMCA. India needs two production lines for faster builds and quality control as the government-owned HAL, controlled by militant, unproductive unionized staff, are incapable of meeting timelines and quality control.