In anticipation of an important pre-Expression of Interest (EOI) meeting set for Friday, private aerospace companies have voiced significant concerns regarding the bidding process for the Advanced Medium Combat Aircraft (AMCA) prototype development. They argue that the framework heavily favors the state-run Hindustan Aeronautics Limited (HAL).
The EOI, released by the Aeronautical Development Agency (ADA) on June 18, was initially viewed as a pivotal move in India’s defence procurement strategy. For the first time, HAL would have to contend with private companies for the opportunity to produce India’s fifth-generation fighter jet. Both public and private sector entities were invited to bid either independently, in joint ventures, or as consortia, marking a potential shift towards increased indigenous participation.
However, private sector stakeholders express concerns that the eligibility criteria and scoring system in the EOI create an uneven playing field that unduly benefits HAL. They argue that while the intent of the EOI is to boost local engagement, the requirements limit genuine private sector involvement.
One of the most contentious issues is a clause stipulating that any Indian bidding entity must be entirely owned and controlled by resident Indian citizens. This requirement effectively excludes collaborations with foreign Original Equipment Manufacturers (OEMs), whose expertise is often essential for complex fighter jet production, especially for many private Indian aerospace companies.
The EOI further specifies that all key managerial roles, including those of CEO, CFO, and the entire board of directors, must be filled by Indian citizens living in India. This restriction poses a challenge for private firms by limiting their ability to bring in foreign experts for leadership positions, a practice that is commonplace in the aerospace sector and critical for accessing global knowledge.
Financial eligibility criteria have also drawn scrutiny. To qualify, a lead firm must demonstrate an annual turnover of at least ₹2,000 crore over the past three financial years, while secondary partners in any joint venture must show a minimum annual turnover of ₹200 crore. Currently, HAL is the only aerospace company in India that meets all these financial metrics.
For joint ventures or consortia, the EOI imposes a cap on the lead partner’s ownership at 50 percent and limits the total number of participants to three, further constraining private sector firms’ potential to create effective alliances.
Industry insiders contend that the detailed scoring system for evaluating bids seems designed to favor HAL—whether it acts as a sole bidder or in partnership with smaller private firms—thus consolidating HAL’s role as the primary integrator of the AMCA project.
One executive from the private sector remarked that the overall process seems to be reverting to an earlier plan: HAL would take the lead in AMCA production, farm out specific components like wings and fuselage to private firms. “Despite the EOI’s promise of equal opportunity, HAL remains the only practical contender under these terms,” the executive noted.
The AMCA project is India’s most ambitious homegrown fighter jet initiative, aimed at addressing critical technological gaps in the country’s air capabilities and decreasing dependence on foreign aircraft. However, the current EOI framework has reignited discussions about the future involvement of private enterprises in India’s defense sector, particularly in high-stakes, strategic projects.
