Chandigarh,Mar, 27
Reviewing several shortcomings in the functioning of state-owned aviation giant Hindustan Aeronautics Limited (HAL) that were brought out by the Comptroller and Auditor General (CAG), a key parliamentary committee has called for a well-planned long-term vision, greater emphasis on research and development, prudent management and revamping financial processes.
“The committee emphasises the urgent need for HAL to transition from a reactive to a proactive research and development strategy, ensuring that technological advancements align seamlessly with national defence objectives and market requirements,” the Committee on Public Undertakings said in a report tabled on March 27. The CAG had highlighted systemic lapses in HAL’s adherence to mandated pre-project processes, including the absence of project feasibility reports (PFRs) in 18 out of 32 projects and detailed project reports (DPRs) in 29 out of 32 projects.
Additionally, technology gap analyses (TGA) were missing in 21 projects, affecting HAL’s ability to identify technical shortfalls and mitigate risks. The report also raised concerns about delays in flagship projects such as the Gas Turbine Engine (GTE), Aircraft-2-Avionics Upgrade and Indigenous Helicopter Development, attributing them to inefficient planning, procurement challenges and shifting project requirements.
Among major financial concerns, the audit noted Rs 100.68 crore in impaired costs related to a system redesign, Rs 159.23 crore in cost overruns for the GTE project and Rs 75.85 crore in excess expenditure on another project because of initial engine selection issues.
Further, HAL’s failure to obtain European Union Aviation on Safety Agency (EASA) certification on time delayed the export potential of a helicopter, resulting in an impairment of Rs 108.24 crore.
In response to the audit report, HAL had acknowledged documentation and procedural gaps but justified its approach, citing flexibility in project approvals and the use of draft cabinet notes for customer-funded projects as substitutes for DPRs.
HAL also attributed delays to evolving defence requirements, complex integration challenges, and the need for indigenous technology development.
The company has since revised its R&D manual to introduce sector-specific processes and issued compliance directives to all R&D centres to strengthen project documentation.
In its report, the committee recommended that HAL enforce strict adherence to the R&D policy by making the preparation of PFRs, DPRs and TGAs mandatory for every project, regardless of funding source or scale. It said the MoD should establish a review mechanism to ensure that all pre-project processes are followed and corrective measures should be taken in cases of non-compliance.
Stressing on conducting thorough research on the project, the committee urged HAL to establish long-term strategic partnerships with both domestic and international vendors to ensure the timely availability of critical components and minimise procurement-related delays.
It asked the MoD to allocate dedicated funding for the early-stage development of test-bed infrastructure, ensuring that essential testing facilities are in place before project execution begins. The committee suggested that to accelerate technological readiness, HAL should invest in advanced material research and indigenous 3D technology capabilities to reduce dependency on foreign suppliers.
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Recommending that HAL strengthen its financial modelling process and establish a financial risk assessment framework before initiating large-scale redesign projects to ensure that cost recovery strategies are built into project planning, the committee further suggested that the MoD should integrate amortisation mechanisms into procurement contracts to reduce financial exposure and ensure that redesign costs are recovered through structured payments.
“The committee urge HAL and the Ministry of Defence to implement the recommendations in letter and spirit, ensuring that future projects are executed with greater efficiency, financial prudence and strategic foresight. The success of India’s defence modernisation and indigenisation efforts will depend not just on technological advancements but on the ability to integrate innovation with effective project management, accountability and long-term vision,” the report added.
