Shares of Hindustan Aeronautics Ltd (HAL) will be in focus on Friday morning after GE Aerospace said it has inked a pact with HAL to jointly produce fighter jet engines for Tejas Mk-II, the Indian Air Force’s Light Combat Aircraft (LCA). The announcement came in the backdrop of Prime Minister Narendra Modi’s first state visit to the US at the invitation of US President Joe Biden.
HAL shares have rallied 24 per cent in the last one month and 48 per cent year-to-date amid an across-the-board buying in defence stocks. Analysts are optimistic on India’s defence story due to favourable policies, rising indigenisation & budget allocation and increase in its components ecosystem. Analysts noted that domestic order inflows in the defence sector are set to grow multi-fold over FY24-25, as acceptance of necessity (AoN), stood at Rs 2.6 lakh crore in FY23, representing 74 per cent of the cumulative AoN over FY18-22.
In the case of GE deal, the jet engines will be produced in India jointly.
“The agreement includes the potential joint production of GE Aerospace’s F414 engines in India, and GE Aerospace continues to work with the US government to receive the necessary export authorisation for this," the US firm said in a statement here.
The agreement would advance GE Aerospace’s earlier commitment to build 99 engines for the Indian Air Force as part of the LCA Mk2 program. In addition, GE will continue to collaborate with Indian government on the AMCA Mk2 engine program, GE said in a statement.
GE Aerospace has operated in India for over four decades, with wide engagement in the industry including engines, avionics, services, engineering, manufacturing, and local sourcing. In addition to potential new work in India, a number of US facilities that currently support work on the F414 engine will see additional volume as a result of today’s announcement.
In 1986, GE began working with the Aeronautical Development Agency and HAL to support the development of India’s Light Combat Aircraft (LCA) with F404 engines. Subsequently GE Aerospace’s F404 and F414 have been part of development and production programs of LCA Mk1 and LCA Mk2 programs. In total, 75 F404 engines have been delivered and another 99 are on order for LCA Mk1A. Eight F414 engines have been delivered as part of an ongoing development program for LCA Mk2.
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