HAL invokes penalty clause against GE for engine delay

Hindustan Aeronautics Limited (HAL) has invoked a penalty clause against US aerospace giant General Electric (GE) over the 18-month delay in the supply of aero-engines for the Tejas Mark-1A jets.

The delay comes as a setback for the Indian Air Force as the HAL will be able to supply only two of the Tejas Mark-1A jets against the 18 jets scheduled for this fiscal, ending March 31, 2025.

The penalty clause had to be “invoked” as there was no other option in the face of the delay, a source said, while another source added that “the contract and its clauses had to be enforced lest the CBI and Central Vigilance Commission hound officials”.

The GE, meanwhile, has attributed the delay to the crisis being faced by one of its South Korean suppliers of engine parts, sources said.

For now, the US company has only two F404 engines available. “India will be getting these two engines to power two Tejas Mark-1A jets,” the sources said.

In 2021, GE had signed a $716-million contract with Ministry of Defence-owned HAL to supply 99 “F404-GE-IN20” engines for the Tejas Mark -1A jets. The company had to supply 16 engines each year, starting April 2023.

The MoD and the HAL have set a target for the production of 24 Tejas Mark -1A jets each year from the next fiscal, the sources said, adding that the GE had assured that it would get its supply chain in order by then. The assurance had been given at the level of US National Security Adviser Jake Sullivan, the sources added.

Amid the delay in the supply of jet engines from GE, India and US had signed in August the Security of Supply Arrangement (SOSA). The pact has clauses allowing access to each other’s resources in case the supply chain disruptions occur – like the one in the case of jet engines.

This arrangement enables both countries to acquire the industrial resources needed from one another to resolve the unanticipated supply chain disruptions.

After the GE’s F404 engine was chosen for the Tejas Mark-1A, the MoD ordered the first tranche of 83 jets in February 2021 under a Rs 48,000 crore order placed with the HAL. The HAL – a Bengaluru-headquartered company — is yet to deliver even one jet. The deliveries were to commence three years after the signing of the contract, or by March this year.

The IAF at present has 31 squadrons (with 16-18 planes each) of fighter jets against the requirement of 42 squadrons. The IAF already has 40 Tejas Mark1 jets. The Tejas Mark 1A is an improved version of the aircraft.

US firm had to supply 16 engines this year

• In 2021, US aerospace giant General Electric had signed a $716-million contract with Ministry of Defence-owned HAL to supply 99 “F404-GE-IN20” engines for the Tejas Mark-1A jets
• The US company had to supply 16 engines each year, starting April 2023
• For now, the US company has only two F404 engines available. India will be getting these two engines to power two Tejas Mark-1A jets, sources said

Delay blamed on South Korean supplier

• The GE has attributed the delay in engines to the crisis being faced by one of its South Korean suppliers of engine parts