HAL Advances GE-F414 Engine Deal Negotiations With US Company

Hindustan Aeronautics Limited (HAL), an Indian public sector company, has initiated steps to finalise a deal with the US for GE-F414 engines. These engines are intended for the indigenous LCA Mk2 aircraft. A contract negotiation committee has been established to expedite this process.

Negotiations with the US company have been active, involving high-level visits between both parties. The aim is to conclude the deal by March 2025. Defence sources revealed that a Memorandum of Understanding (MoU) was signed on June 6, 2023, between HAL and General Electric Company for producing GE-F414-INS6 engines in India.

Technology Transfer and Licensing

The MoU outlines that HAL and GE will work on Purchase and Business Agreements for engine production in India. Engine parts representing 80% of the engine's value will be licensed through technology transfer, which is 22% higher than the previous agreement in 2012. The total value of these agreements is approximately one billion USD at 2023 prices, subject to negotiation.

Mandatory requirements for technology transfer include a Manufacturing License Agreement (MLA) and DSP-83 (Non-Transfer and Use Certificate). "The MLA & DSP-83 were signed by all stakeholders including Defence Ministry and GE, in September 2024," defence sources confirmed.

Ongoing Negotiations

HAL began negotiations with GE on December 3, earlier this month. They have requested technical documents from GE to evaluate the depth of technology transfer. Discussions are set to continue in four phases, focusing on manufacturing technology and assessing the depth of technology being transferred, which is up to 80% of the engine's value.

The terms related to technology transfer include technical documentation, support, training, delivery schedules, price escalation formulae, warranty options, and more. These discussions are ongoing and have not yet reached a conclusion.

"Therefore, at this stage, it is too early to conclude that there will be serious cost escalation in the process of acquiring GE 414 engines," defence sources stated.