Tejas Mk-1A Unit price falls from $64.5 million to $58.1 million

The Indian defense ministry is all set to place an order for 83 Tejas Mk1A with Hindustan Aeronautics Ltd (HAL) after commercial negotiations committee approved a deal for around Rs 45,000 crore, which is nearly Rs 5,000 crore less then what was quoted by HAL nearly two years ago.

HAL had asked for Rs 463 crore ( $64.5) for the Tejas Mk-1A versus Rs 363 crore ( $50.6) for the original LCA-Tejas Mk1. Now revised price after renegotiation stands at 417 crores ($58.1) per unit cost in fly-away condition minus its weapons system. Su-30MKI built at Nashik by HAL costs around Rs 415 crore ($57.8) per unit, which still makes Tejas Mk-1A per unit cost higher than locally build Su-30MKI. HAL will be a prime integrator of the Tejas Mk-1A and will outsource over 5000 production modules to various private sector entities. L&T, VEM, and Tata Advanced Materials have already been outsourced entire fuselage section of the LCA-Tejas aircraft.

In comparison to its competitor in the segment, AESA equipped Tejas Mk-1A is still cheaper than Gripen C which costs $63.4 million per unit without AESA Fire control Radar which is only offered on its Gripen E Model which has per unit cost of $85 million.

The current deal includes 73 Single Seater Tejas Mk-1A and 10 Tejas Mk1 Trainer. IAF already has placed orders for 8 Tejas Mk1 Trainers in first order for 40 jets which will be manufactured along with 10 more Trainer ordered by IAF first before Tejas Mk1A delivery starts in 2023.

Prices mentioned are estimated costs since the deal will also include 3 simulator cost and additional infrastructure cost which was required to set up an additional production line which also includes investment cost of research and development of upgraded Tejas Mk1A fighter aircraft.

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