Govt mulls overhaul of HAL to boost efficiency

New Delhi: The government is looking at options of restructuring public sector giant Hindustan Aeronautics Limited (HAL) to improve its efficiency and speed up delivery of orders to the armed forces. The process to forge a roadmap has begun, with the focus being on improving the current structure and the options include creation of independent entities focused on different aspects of aeronautical manufacturing.

Sources said that an external consulting group, hired for the task by the government, has initiated work and is looking into the current functioning and structure of HAL, with discussions taking place with senior management. One of the reasons restructuring is being planned is due to the unusually large order book that stands at over ₹2.7 lakh crore. The order book includes fighter jets, utility helicopters, attack choppers and engines, with several additional orders expected this year.

In an earlier plan to restructure HAL, it was envisaged that three independent entities could be created, each specialising on a particular aspect of aeronautical manufacturing. Sources said that one of the thoughts was to create an entity each specialising on fixed wing manufacturing, helicopters and maintenance, overhaul and repairs. The plan however did not go into implementation as the order book of the company was not as robust.


At present, the order book of the company is more than eight times of its annual revenue, with concerns in some quarters that this might limit its capacity to efficiently deliver on timelines. The company is already running behind significantly in the supply of Light Combat Aircraft, with the air force raising its concerns, given the dwindling size of its combat strength.

The overloaded order book has also served as a liability to HAL for its participation in the mega initiative to develop next generation fighters under the Advanced Multirole Combat Aircraft program.