AMCA Project Controversy: Private Sector Flags HAL Bias Ahead of Key Meeting

    image credit : X@DefenceMinIndia

The Indian defence sector stands at a pivotal moment with the development of the country’s first indigenous fifth-generation fighter jet—the Advanced Medium Combat Aircraft (AMCA). However, even before its production has begun, concerns are brewing in the private defence industry about the fairness of the selection process.

Ahead of the crucial pre-Expression of Interest (EOI) meeting scheduled by the Aeronautical Development Agency (ADA) this Friday, several private defence firms have raised alarms, alleging a process that is heavily skewed in favor of Hindustan Aeronautics Limited (HAL)—India’s state-run aerospace and defence giant.

A Promise of Competition Turns into a Perceived Monopoly

The AMCA program was expected to be a revolutionary shift from traditional defence production models. In the past, HAL was the automatic choice for all major aircraft manufacturing contracts—such as the Tejas Light Combat Aircraft and the license production of MiG and Sukhoi jets. But with the issuance of an open EOI by ADA on 18 June 2025, it was hoped that private players would finally get a level playing field to contribute as major integrators, not just component manufacturers.

The EOI had signaled an intent to break HAL’s long-standing monopoly, opening the door for private sector leadership, joint ventures, or consortiums to lead or co-lead the project. The Defence Ministry’s official statement dated 27 May emphasized a "competitive execution model", allowing bids from both public and private entities, independently or in collaboration.

But industry insiders now argue that these promises of fairness are illusory.

Private Companies Cry Foul Over Qualification Criteria

According to multiple private sector representatives familiar with the matter, the qualifying conditions laid out in the EOI are virtually unachievable for any Indian private company. This includes several financial and structural stipulations that only HAL can comfortably meet.

Key Roadblocks for Private Players Include:

1. Ownership Restriction: The EOI mandates that both the lead entity and all JV partners must be owned and controlled by resident Indian citizens. This disqualifies many private firms currently engaged in foreign OEM (Original Equipment Manufacturer) partnerships—a standard model in global aerospace manufacturing.

2. Key Management Restrictions: All top-level positions—CEO, CFO, COO, and entire board—must be held by resident Indian citizens. This regulation prevents private companies from bringing in global aerospace experts to head the initiative, which would be crucial for a fifth-generation fighter jet development.

3. Financial Thresholds:

   • Lead company must show annual turnover of ₹2,000 crore over the last three financial years.

   • Non-lead partners must show ₹200 crore turnover in the same period.

   • All companies must also demonstrate positive net worth over the last three years.

With these stringent terms, only HAL meets all the conditions outright. Most Indian private defence firms—despite having world-class facilities—either fall short on turnover or rely on foreign technical assistance.

Biased Scoring Metrics Alleged

Industry sources also highlighted that the EOI scoring system unfairly favors HAL, whether it bids alone or as the lead partner in a JV. Even if private companies form alliances, they argue, HAL will have a built-in advantage in points scored for capability, experience, and financial strength.

The Reality Behind the Open Bidding Promise

Privately, defence industry leaders admit that the process seems to be merely formalizing HAL’s selection as the lead integrator, under the guise of competitive bidding. A senior industry executive observed:

"Before the EOI was issued, the understanding was HAL would lead the project and outsource major parts like wings and fuselage to private companies. The EOI makes it appear open, but that same model is just being implemented in another way."

This would mean HAL remains at the helm, while the private sector continues in secondary or support roles, contrary to the original goal of empowering domestic industry to innovate and lead.

The Strategic Importance of AMCA

The Advanced Medium Combat Aircraft (AMCA) is not just another fighter jet. It represents India’s leap into the league of nations developing fifth-generation stealth aircraft, which include the United States (F-35), Russia (Su-57), and China (J-20).

Equipped with stealth capabilities, supercruise, advanced avionics, and network-centric warfare systems, AMCA is envisioned as the future backbone of the Indian Air Force (IAF) and is meant to eventually replace older aircraft like the Jaguar and Mirage-2000.

What’s at Stake for the Indian Defence Industry?

The AMCA project is not just about aircraft development—it's also about shaping the future of defence manufacturing in India. If private companies are consistently pushed to the periphery, it undermines India’s long-term goal of building a robust, self-sustaining defence ecosystem.

Allowing HAL to dominate every major project limits the scope for innovation, competition, and private sector growth, say critics. India’s growing defence needs—especially in the face of a two-front military threat—require faster timelines, cutting-edge technologies, and greater efficiency, something that the private sector has shown capability in delivering.

A Call for Reform and Transparency

The Ministry of Defence and the ADA are now under pressure to reassess the EOI framework to ensure that it genuinely supports equal participation. Industry stakeholders are urging the government to:

• Relax ownership and managerial restrictions that prevent hiring of global experts.

• Introduce flexible scoring that factors in innovation and technical partnerships.

• Enable startups and MSMEs to participate meaningfully, not just in tier-2 roles.

Unless changes are made, the AMCA program risks becoming another HAL-dominated production line, limiting the original vision of indigenous innovation driven by both public and private players.

Conclusion: Crossroads of Defence Modernisation

India stands at a crossroads. It can either allow legacy systems to dictate the future or open the gates for new players to reshape the defence landscape. The AMCA project is a test—not just of engineering excellence—but of policy integrity and industrial vision.

The coming weeks, and how the EOI process evolves, will determine whether India truly embraces private sector innovation or falls back into the safe, state-controlled comfort zone.

Written by Defence Expert