The General Electric (GE) Aerospace-Hindustan Aeronautics Limited (HAL) deal for transfer of technology (ToT) to co-produce engines in India for the LCA Tejas MK-2 is expected to cost less than a billion dollars for 99 engines, top Defence Ministry officials’ calculations — ahead of formal price negotiations and clearance from the US Congress for the rare export of critical military hardware — show.

The pact will catapult India into an elite club of possible four, after the US, Russia and France. The base calculation of the cost of engine manufacturing began in 2012 when the Defence Research and Development Organisation’s (DRDO) Aeronautical Development Agency opened talks with GE for ToT of GE F414-INS6 after burning turbofan engines in the 95 kN thrust class for LCA MK-2 project, said sources. The Indian Air Force (IAF) requires LCAs to replace its aging fleet and replenish its strength.

But at that time, the US had only agreed for 58 per cent ToT. It has now been increased to 80 per cent which would take up the Indian content in the fighter aircraft to upwards of 72 per cent. Besides, accumulation of more-than-a-decade-long inflation since the initial negotiation also needs to be taken note of, sources said. A senior Ministry officer said Defence Minister Rajnath Singh’s guidance and leadership enabled the signing of these agreements with the US.

What’s the gain

Top official stated that the GE F414-INS6 engine ToT is at a “different level and scale” and has never happened anywhere in the world in terms of military technology. “More than the business transaction, the exchange of critical technology shows the trust Biden administration has in the Indian government and its intellectual stream since the ToT is beset with many IPR issues,” said top defence officials, given the fear that it might not fall in enemy hands or with third party.

Among 11 key technologies being offered by the GE are special coating to avoid corrosion, erosion and thermal barrier for hot end; machining and coating for single crystal turbine blades; machining and coating of nozzle guide vanes and other hot end parts; and blisk machining, said sources.

An analysis of the comparison of government-to-government negotiations between India and the US in 2012 and 2023, as top defence sources divulged, show that GE has agreed to fully offload its skill set as opposed to limited ToT earlier. Similarly, there are 11 other points where the Modi government was able to convince the Biden administration to hand over more aspects of deep technology, said officials.

Defence officials believe that India also stands to benefit from the deal with an increase in payload and fuel capacity, multiplying of operational capabilities and less turnaround time for repair and maintenance. HAL is expected to take at least three years to roll out LCA MK-2, said sources.

Overall, it will eventually expedite India’s stride to become self-reliant in manufacturing of fighter jets, since it would aide other indigenous efforts already going on for aerial platform development, manned and unmanned for military purposes and for civilians aircrafts, too.

It is learnt that the entire manufacturing would happen in India except for small components, and the IAF is expected to place orders for 120 to 130 LCA MK-2s.

Stock action

The stock price of HAL has been on the rise for some time. In fact, it surged over 43 per cent during the last six months and over 104 per cent in one year. On June 19, the scrip also touched fresh 52-week high of ₹3,950. However, it has shed some gains in the past four days and ended at ₹3,640 on Friday.