HAL Tanks 8% as AMCA Fighter Jet Race Excludes State Giant

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AuthorVihaan Mehta|Published at:
HAL Tanks 8% as AMCA Fighter Jet Race Excludes State Giant
Overview

Hindustan Aeronautics Limited (HAL) saw its stock price plummet over 8% on Wednesday. Reports indicate the state-owned defense firm was excluded from the shortlist for the next-generation Advanced Multirole Combat Aircraft (AMCA) program. This marks a significant setback for HAL's ambitions in advanced fighter jet development.

HAL Faces Setback on AMCA Program

Hindustan Aeronautics (HAL) shares tumbled 8.3% in morning trading Wednesday, reaching a low of ₹4,100 per share. The sell-off followed reports suggesting the defense behemoth was not selected for the critical Advanced Multirole Combat Aircraft (AMCA) program.

Exclusion from Next-Gen Fighter Jet Development

The exclusion comes as the government reportedly shortlisted three private defense companies based on technical expertise, manufacturing capacity, order book, and financial strength. These criteria prioritized firms capable of absorbing complex AMCA designs and possessing proven development and manufacturing experience. HAL's significant order book of ₹2.52 trillion, which stands at over eight times its FY25 turnover, appears to have been a disqualifying factor under a rule limiting order book size relative to turnover. This decision removes HAL from contention for India's most ambitious military R&D initiative.

Shortlisted Private Players Emerge

Tata Advanced Systems Limited, Larsen & Toubro (L&T), and Bharat Forge have reportedly been selected to develop and manufacture the next-generation fighter jets. These companies are expected to collaborate with the Aeronautical Development Agency (ADA) to produce five AMCA prototypes, with the Defense Ministry allocating approximately ₹15,000 crore for this initial stage. The program aims to equip India's air combat fleet from the mid-2030s onward, with initial orders anticipated for around 120 jets. The news saw L&T shares climb 1.7% and Bharat Forge shares rise 2.4% intraday.

Market Reaction and Future Outlook

While HAL faces a blow to its next-generation fighter jet aspirations, the selection of private players signals a shift in India's defense manufacturing strategy. The long-term success of the AMCA program, and the subsequent order book for the chosen firms, will be closely watched by investors. HAL's focus may now pivot to its existing strong order book and other ongoing projects.

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