Shares of Hindustan Aeronautics Ltd. HAL will be in focus on Friday morning after GE Aerospace announced it has inked a pact with HAL to jointly produce fighter jet engines for Tejas Mk-II, the Air Force's Light Combat Aircraft LCA.
The HAL shares have rallied 24 per cent in the last month and 48 per cent year-on-year, amid an across-the-board buying in defence stocks. Affecting favourable policies, increasing indigenization budget allocation and enhancing its components ecosystem, analysts are optimistic on India's defence story. Analysts said domestic order inflows in the defence sector will grow multi-fold over FY 24-25, as acceptance of necessity AoN stands at Rs 2.6 lakh crore in FY 23, representing 74 per cent of the cumulative AoN over FY 18-22.
In the case of the deal, the jet engines will be produced jointly in India.
The agreement includes the possibility of joint production of GE Aerospace's F 414 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.
The agreement will advance GE Aerospace's earlier commitment to build 99 engines for the Indian Air Force as part of the LCA Mk 2 program. In addition, GE said it will continue to collaborate with the Indian government on the AMCA Mk 2 engine program.
For more than 40 years, GE Aerospace has operated in India, with a wide presence in the industry, including engines, avionics, services, engineering, manufacturing, and local sourcing. A number of US facilities that currently support work on the F 414 engine will see additional volume as a result of today's announcement.
In 1986 GE began working with the aerospace development agency and HAL to assist in the development of India's Light Combat Aircraft LCA with F 404 engines. GE aerospace s F 404 and F 414 have been part of LCA Mk 1 and LCA Mk 2 development and production programs. In total, 75 F 404 engines have been delivered and another 99 are on order for LCA Mk 1 A. eight F 414 engines have been delivered to LCA Mk 2 as part of a ongoing development programme.