HAL is still waiting for IAF to clear its dues

New Delhi: Even as state-owned Hindustan Aeronautics Ltd (HAL) is hoping to deliver the first Light Combat Aircraft (LCA) made to the Air Force's final operational clearance (FOC) configuration in December this year, it urgently needs arrears totalling Rs 20,000 crores from the Indian Air Force (IAF). The financially battered defence PSU had to borrow Rs 1,000 crores from banks last year to clear staff salaries and routine expenses.

Code red

"Until now we have somehow managed [our finances] with our funds and from bank loans. I hope something will come through soon for us to maintain the level.
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Expectation is also on the revised estimates in the defence budget and some money from deliveries to the Army," HAL CMD R Madhavan said.

Which was why, he said, even if the order for the 83 LCAs came in, "We can take it up only if it comes in with the money associated with it." The money was needed for materials, besides design work taken up with development body, the Aeronautical Development Agency.

No fresh LCA orders received from IAF yet

Madhavan also said that after recent price negotiations on the LCA purchase, HAL has not received any fresh order from the IAF yet. He, however, added that money is HAL's first concern.

The backdrop

The FOC for the LCA was given by the IAF in February. The IAF had bought 20 LCAs in the FOC version, having already received the first lot of 20 in the Initial Operational Clearance (IOC) version, the HAL CMD said.

"We have the capacity to make 16 LCAs a year [at the Bengaluru complex.] We expect that the firm order for the approved 83 planes also come in," he said. The order is worth around Rs 59,000 crore.