HAL, other defence stocks rally up to 4% after govt clears Rs 62,000 crore Tejas Mark 1A deal

Defence stocks such as Hindustan Aeronautics Limited (HAL), and Bharat Dynamics Limited (BDL) rallied up to 3.5% on Wednesday after the government cleared a major deal for the Indian Air Force (IAF) to acquire 97 LCA Tejas Mark 1A fighter jets at a cost of Rs 62,000 crore.

The shares of HAL rallied 3.5% to their day’s high of Rs 4,611.60 on the BSE, while those of BDL jumped 1.35% to Rs 1,570.45.

The approval came during a high-level meeting of the central government and paves the way for HAL to begin production.

This latest order is the second major procurement for the Tejas Mark 1A. A previous order placed a few years ago was for 83 aircraft valued at around Rs 48,000 crore.

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With the fresh deal, the total number of LCA Mark 1A jets for the Air Force will rise to 180. The jets will replace the ageing MiG-21 fleet, which is being phased out in the coming weeks, according to defence sources.

The indigenous fighter programme enjoys strong backing from the Defence Ministry and Air Headquarters. Officials have noted that the Tejas initiative will not only strengthen India’s self-reliance in defence but also provide opportunities for hundreds of small and medium enterprises involved in the supply chain.

Prime Minister Narendra Modi has been a strong supporter of the programme, and under his leadership, HAL has secured multiple orders for indigenous aircraft, helicopters, and engines.

The Tejas project has symbolic significance as well. Prime Minister Modi flew in a trainer variant of the fighter jet, becoming the first Indian PM to undertake a sortie in a combat aircraft. He later described the experience as enriching and said it boosted his confidence in the country’s indigenous defence capabilities.

Recently, the Defence Acquisition Council also approved additional proposals valued at Rs 1.6 lakh crore, which include the acquisition of 156 LCH Prachand helicopters and upgrades for 84 Su-30MKI fighters.

The Tejas aircraft was first inducted in 2016, and currently, two IAF squadrons operate the fighter. With the latest order, the Tejas Mark 1A is expected to become the backbone of the Air Force’s fighter fleet in the coming years.

Deliveries for the earlier order of 83 jets worth Rs 36,468 crore are scheduled to begin from February 2024, adding to HAL’s production pipeline.

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