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July 29, 2014

India To Sell Partial Stake in HAL

India will sell 10 percent of its 100 percent stake in monopoly military aircraft producer Hindustan Aeronautics Ltd. (HAL), a senior Defence Ministry official said. All formalities have been cleared and the 10 percent stake will be put on sale by October, the official said.

HAL, with an annual turnover of US $2.53 billion, is the country’s sole producer of military aircraft. It plans to use money from the sale to finance a $5 billion modernization of the company, said the MoD official.

The government, however, has no plans to privatize HAL by selling over 50 percent of its stake in the company, the MoD official clarified.

HAL needs extra funds to add manufacturing facilities to produce the fighter aircraft that will be selected by the Indian Air Force for its $12 billion Medium Multi-Role Combat Aircraft program. The Rafale has been downselected and contract negotiations are underway.

HAL has also tied up with Sukhoi to develop a fifth-generation fighter aircraft for which HAL will need to set up separate production lines. HAL will need another production line for serial production of the homemade Light Combat Aircraft, which is likely to be inducted this year.

Currently, HAL is the license producer of the British-made Hawk advanced jet trainer and the Russian-made Sukhoi fighter aircraft.

HAL also manufacturers helicopters, aircraft and UAVs, and is developing an indigenous light utility helicopter.

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