The government has approved the acquisition of 97 Tejas Mark-1A fighter jets and six airborne early-warning and control (AEW&C) aircraft, a deal valued at nearly ₹85,500 crore, to support the Indian defence sector.
The Cabinet Committee on Security (CCS) gave the green light on Tuesday, allocating ₹66,500 crore for the Tejas fighters and about ₹19,000 crore for the AEW&C fleet. The decision comes as the Indian Air Force (IAF) prepares to retire its ageing MiG-21 squadrons, marking a pivotal step in strengthening the country’s aerial combat and surveillance capabilities while advancing the “Make in India” programme.
Tejas to Fill the MiG-21 Void
The Tejas Mark-1A, developed by Hindustan Aeronautics Limited (HAL), is a modernised version of the indigenous Tejas jet, featuring superior avionics, radar, and weapons integration. This is HAL’s second major Tejas Mk1A contract after the 2021 order.
Deliveries are expected to begin this financial year, with the first six jets arriving in FY26. With earlier engine supply issues now resolved, HAL is scaling up its production capacity—targeting 24–30 aircraft a year through a new assembly line in Nashik alongside its Bengaluru facilities.
The acquisition is critical for the IAF, whose fighter strength is set to drop to a low of 29 squadrons as MiG-21s are phased out. The new fleet will not only bridge this gap but also strengthen India’s preparedness against evolving threats amid growing China–Pakistan military coordination.
Eyes in the Sky
Equally significant is the nod for six AEW&C aircraft. Built on Airbus A-321 platforms, these planes will be equipped with advanced radars and electronic systems capable of providing 300-degree coverage. They are slated for delivery by 2033–34, offering a major boost to India’s airborne surveillance and early-warning network.
Market Cheers Defence Push
The mega order sparked a rally in defence stocks. HAL’s share price rose 2.6% to ₹4,560, extending its year-to-date gains to nearly 10%, while other defence PSUs also saw strong buying.
Brokerage firm UBS retained its “Neutral” view on HAL with a ₹4,900 target price, citing execution timelines as the key factor to watch. Among 22 analysts tracking HAL, 17 recommend a Buy, three suggest Hold, and two advise Sell.
With around 180 Tejas Mark-1A jets now lined up for production, HAL is entering a crucial phase that will shape India’s defence manufacturing for the next decade. The clearances rank among the largest defence deals in years, signalling a decisive push to equip the IAF with modern aircraft while moving away from foreign dependence.
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