Cost of the Tejas: when a sword arm is worth it - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Monday 21 February 2011

Cost of the Tejas: when a sword arm is worth it

The Tejas, fitted with iron bombs, taxiing out for a bomb release test flight from the HAL airfield at Bangalore

By Ajai Shukla
Aeronautical Development Agency, Bangalore
Business Standard, 22nd Feb 11

The spotlight is swinging onto the Tejas Light Combat Aircraft (LCA). It has been cleared for induction into the Indian Air Force, construction has begun on two squadrons of Tejas (40 aircraft), and the IAF is picking 40% of the tab for developing a more powerful Tejas Mark II. Now its designers are hitting out at critics who charge that the Tejas programme has greatly overshot its budget.

PS Subramanyam, the head of the Aeronautical Development Agency (ADA), which spearheads the Tejas programme, has given Business Standard detailed financial figures to argue that the fighter’s development cost has remained within budget. ADA also points out that the Tejas is significantly cheaper than any comparable fighter.

"No overshoot"

Slamming some recent media reports that the Tejas was enormously over budget (e.g. Times of India, 21st Nov 2010, “At Rs 17k cr, Tejas cost zooms 3000%”) Subramanyam reveals that just Rs 6,051 crore have been spent so far on the fighter that performed aerobatics at the Aero India show in Bangalore this month. Another Rs 746 crore (of the sanctioned Rs 3,650 crore) has been spent on the naval Tejas, which will fly from the Indian Navy’s future aircraft carriers.

ADA has provided a detailed cost breakdown. The LCA project began in 1983 (the name Tejas only came later) with a preliminary allocation of Rs 560 crore for “feasibility studies and project definition”. Subramanyam complains that accusations of cost overruns stem from the misperception that Rs 560 crore was the entire budget for developing the Tejas. In fact, this was merely for defining the project and creating the infrastructure needed for designing, building, testing and certifying a fighter.

Tejas: what the MoD will pay

Ser No


Date of Sanction

Sanctioned cost

Spent till 25 Jan 11

  Air Force


Phase-1 (Tejas prototype)

23rd Jun 1993



Phase-2 (Tejas Mark I)
20th Nov 2001
   Sub-total (a & b)
Phase – 3 (Tejas Mark II)
20th Nov 2009



    Sub-total (a, b & c)




Pre-project design
20th Jan 1999



Phase-1 (Tejas Mark I)
28th Mar 2003


Sub-total (a & b)

Phase-2 (Tejas Mark 2)
17th Dec 2009
Total (a, b & c)
Grand Total (1 & 2)

*          Includes Rs 560 crores sanctioned on 22nd Aug 1983
**         Rs 3302 + 2475 on 20th Jan 2001, and 20th Nov 2009 respectively
***       Rs 949 + 766 on 28th Mar 2003, and 17th Dec 2009 respectively

Only after a decade of infrastructure building did the design work start, when the MoD sanctioned Rs 2188 crore in 1993 (which included the initial Rs 560 crore). This allocation was to fund the building of two “technology demonstrator” Tejas fighters.

“Within this budget we flew the Tejas in 2001, and even built two extra Tejas prototypes”, says Subramanyam. “And that was without any adjustment for inflation or foreign exchange appreciation, though the dollar shot up from 26 rupees to 47 rupees during that period. Our forex component of Rs 873 crore should have been adjusted to Rs 1642 crore.”

Buoyed by the Tejas’ successful test flight in 2001, the MoD allocated ADA Rs 3302 crore in Nov 2001 for Phase 2 of the programme. This was to fund a production line and the building and flight-testing of 8 “limited series production” fighters. Phase 2 will run till 2012, when the Tejas obtains final operational clearance (FOC) for induction into the IAF as a frontline fighter.

In 2009, with the Tejas flight-testing running slow, ADA obtained an additional Rs 2475 crore from the government for Phase II. Subramanyam argues that this is not a cost overrun. “The MoD’s allocation of 2001 contained no protection from inflation. If you roll back our annual expenditure to the base year of 2001, we remained within budget”, says the ADA chief.

The IAF is now confident that its Tejas Mk I will obtain FOC in 2012, within the sanctioned Rs 7,965 crore (Rs 2,188 + 3302 + 2475 crore). All that remains is to integrate a long-range missile; to enable mid-air refuelling; and to enable the Tejas to fly as slow as 200 kmph.

What we got

Subramanyam argues that this money has not just developed the Tejas, but also India’s ability to build serious fighters. “Consider the aerospace infrastructure that we have built across the country, in key DRDO laboratories, defence PSUs, private industry, academic institutions, and test facilities like the National Flight Testing Centre (NFTC). This has bridged a technology and infrastructure gap of 2-3 generations”, he says.

Meanwhile, the naval Tejas will fly within weeks. Significantly different from the IAF version, the naval Tejas must get airborne within 195 metres (the length of an aircraft carrier deck) and withstand the cruel impact of repeated deck landings, in which it must be slammed down precisely where the deck begins. Of the Rs 1,729 crore allocated for the naval Tejas, ADA has spent Rs 746 crore so far.

Encouraged by the success of Tejas Mk I, the MoD allocated Rs 2,432 crore in 2009 for making the IAF’s fighter even better: developing a Tejas Mk II, with a newer, beefier GE-414 engine. Simultaneously, Rs 1,921 crores was sanctioned for the Naval Tejas Mk II. While the navy funded 40% of its fighter from the start, the IAF is a new convert, matching the navy in funding the Tejas Mk II.

“By 2012, the total development cost for an IAF and a naval Tejas --- including a single-seat fighter and a twin-seat trainer variant for each --- will be Rs 9,690 crore. Another Rs 4,353 crore will be spent on the Tejas Mark II, bringing the total cost to Rs 14,047 crore”, says Subramanyam.

The Gripen, a comparable if somewhat more advanced fighter, which Sweden developed during this period, cost US $13.5 billion for 204 fighters, assuming complete tax exemption. A similar number of Tejas fighters entering IAF and navy service would --- provided that HAL holds the Tejas manufacturing price at its current estimate of Rs 180 crore per fighter --- have cost India US $ 11.28 billion.

Given that the Sweden entered the Gripen programme with a mature aerospace industry (coming off the successful Viggen programme), India will have built the Tejas, as also an entire aerospace design and manufacturing eco-system, for 17% less money than Sweden paid for the Gripen.


  1. Rather than being dependent on the mercy of our new found friends we should encourage the development of our infrastructure and our own companies in defence. Please name a single aircraft design program which started from scratch and did not have cost or time overruns??

  2. I didn't understand the intent of this article. That's ok

    But, this is what i have to say to all the media that is bashing Tejas program.

    One has to understand the concept of starting point. I believe Tejas program is a stepping stone for India to develop aerospace insfrastructure & technologies. We shall see infuture how India will leverage the synergies developed from Tejas.

    we have 1+ billion people. The only way we can feed them is by developing high end technology. So We(indians) can build them in India to defend India.

    Wisc dude....

  3. Its worth every penny. !! Thanks ajay and chief ADA for eye opener article!

  4. This might be peanuts if you look at how much western world spends on building their front line fighter aircrafts

  5. Mr Subramanyam seem to be juggling figures like they did in the CWG scam & 176000 cr = 0 formula :DD

  6. We shall not take the cost of LCA as several units of a single product equipped in IAF inventory. Rather, the LCA development has indeed created an infrastructure of labs,academia, software programs, sub components and talent pool. Also many offshoot technologies are adopted by other defense platforms. Another, very revolutionizing event that occurred is that many private industries also got involved in systems and sub components design and has created a huge base of Govt-Private sector aeronautics platform. All the LCA components, avionics and systems are standardized for application and interoperability with other IAF aircraft such as Jaguar, Su30MKI and even the future MMCRA. The LCA development has equipped India to rapidly evolve more advanced family of aircraft. By looking into all the gains, the total cost of LCA is negligible as compared to buying 3 squadrons of comparable aircrafs off the shelf from leading foreign vendors.

  7. Thank you. Thank you. Thank you.

  8. Very glad to know the truth about funding and spendings.
    Now ToI(let) people should go to hell with their foreign funded bullshit news.
    Infact govt. should strictly punish those who publish wrong facts in favor of some foreign manufacturers over "Made in India" products.
    Made in India is most reliable and strategically more useful for India as compared to any foreign made product.

  9. I think every Indian Scientist and Engineer who has worked with dedication and persevered through criticisms and failures deserve India's highest praise. Their untiring work has propelled India to a place in the World that is in keeping with her great and noble culture. I would like to tell all of those great technical minds that 100s of thousands of Indians are immensely proud of their achievements.
    It is foolish to think that poverty can ever be eradicated by dis-investing in science and technology. India's future prosperity and greatness lies in achieving self-sufficiency in all areas of technology. This should be learned from history. The human potential that India is rich in, should learn to stop complaining and criticizing and start delivering as responsible citizens of a great nation that has an important role to play in the future of humanity.

  10. Not sure why they compare the Tejas programmer with that of Gripen. Gripen flies and serves in a number of services. On the other hand, still Tejas is not in service yet though both started in a similar time frame. I am criticising Tejas, just saying that comparing cost of Tejas with Gripen at this point of time is ridiculous.

  11. Not to forget the following points too:

    1. Money was spent mostly within India. Portion of that goes into our economy and goes back to GoI as taxes.

    2. Increased employment for our youth. Each well paying job supports two-three additional low paying job.

    3. Increased technological base within the country

  12. Ajai sir

    Thanks for the good analysis, but your article seems to be covertly suggesting that selecting JAS39 Gripen IN for MMRCA is not worth it, and money should be poured into LCA Tejas. Please clarify

    Joydeep Ghosh

  13. Mr.Ajay ,
    apart from engine(GE414) , what will be major changes in Tejas mk2 from mk1 . (ex., Weapons /payload/new radar )

  14. If PSUs were to publish facts quickly and squash rumours, people would not be trolling looking to rubbish these companies.

    Instead they brand everyone who has a different point of view anti-national. It is precisely this condescending culture that they need to overcome else, even when they are cruising along it will seem like they are drowning and trying to take the nation with them.

  15. Sir
    It is foreign military industrial complex - corrupt politician - corrupt Officer-agent nexus which is hurting our projects most LCA and Arjun are prime example

  16. Ajay...
    this is inspiring stuff.... I wonder if this success will rub off on the HR front of things and will encourage more fresh (and brighter) engineers to join say a HAL or a ADA or a NAL.
    I dare say if these labs were not in bangalore(where the IT industry is not concentrated) it would have happened. I also dare say that had it not been for HAL, ISRO, ADA the IT industry would not have flourished in Bangalore.

    SOLUTION - time to up the salaries at defence labs while taking out some of the sarkariness....

  17. Kudos to DRDO, ADA and HAL for producing our LCA. Keep up with the good work. My only wish is to see DRDO, ADA and HAL master the design, fabrication and manufacturing of a futuristic world class beating fighter jet engine in record time and budget. To MoD, spend money lavishly on the AeroSpace, Naval surface and subsurface design institutions, Materials research and Manufacturing research facilities. Create new infrastructures and design facilities for futuristic state of art capabilities. We have to break the mould of technology importers and instead become technology exporters.

  18. Very interesting headline Col. Shukla :)

  19. You've broached on a topic that I've read very little about. How does the Tejas (Mk. 1 or Mk. 2) compare with the Gripen NG? You say that the Gripen is more advanced. Could you provide more details?

  20. Thanx for the informative article. It has almost ended the humbug propaganda that has been looming large in the air against the Tejas for obvious reasons.

  21. @ Anon 22/2 18:01

    IT companies didn't come to Bangalore because of HAL, ADA and ISRO. It came to Bangalore because

    * High concentration of quality educational institutes in South (I am not saying that North doesn't have any decent institutes. Due to narrow land mass in south, density is higher)
    * Cool climate in Bangalore which would cut down cooling costs
    * Bangalore at that time was wonderful city and known as pensioner paradise.
    * Early starters in IT revolution in India are from South India particularly from Bangalore or studied at IISc (example Indians at Texas Instruments)
    * Govt support at Bangalore was good than any other cities. Only later other Govts realised their mistake.

    It is incorrect to say that IT companies came up due to the presence of Aeronautical companies. At that time frame, Aeronautical companies (expect ISRO) didn't have any achievement of its own and were mostly seen as a manufacturing companies happy with what they do. (Don't talk about Marut and all, it was not designed by Indian but by German).

    I agree the solution provided by you will help. It would help only the professional arm of HAL, ADA & NAL will involves designers. If you take the manufacturing arm of those companies, they will never change their stance due to their strong union. Hence the quality problems will crop up irrespective of any good design. Govt have to abolish trade unions on its defense manufacturing sectors. If some says they have never involved in strikes, I would say that they don't need to strike if they intimidate too much. I have seen and interacted personally with those factory workers; they can never be good in what they do. Designers on the other hand are good and if they are good, they switch to private companies like GE etc.

  22. two or three years back,THE HINDU daily published most of these points in an article.but the bashing of DRDO continues,including a parliament report.the spin-offs of lca prog.,are not shown anywhere like a software used by boeing,generating wonders whether the paki or chinese AF has conducted such vigourus tests on JF-17 OR J-10 as the IAF HAS done with TEJAS? simply,lca delay is to due frequent changes by iaf of ASR-air staff requirements.within the constraints,DRDO has done wonderfully.

  23. What an awesome article. Thank you for this!

  24. When I was a young boy studying for my Senior Cambridge my uncle gifted me a year's subscription to the LIFE magazine.My earliest memory with the magazine was an issue dated 50 years earlier(1961) featuring a double page black and white photograph of Defence Minister Krishna Menon embracing HAL Chief Test Pilot Suranjan Das moments after he test flew India's first supersonc Fighter the Marut(HF-24).
    TIME magazine said INDIA had joined the elite league of six nations who had designed and test flown a military jet fighter, Others were USSR,UK,USA,SWEDEN,FRANCE and GERMANY.
    Today 50 years later we are barely struggling to put the TEJAS into squadron service with a truncated IOC.
    If we had the wherewithal to design a fighter jet with German (Dr, Kurt Tank) collaboration 50 years ago where did that talent get frittered away?

  25. All those great minds who compare western development cost and ours should keep in mind theirs is R&D and most probably doing for the fist time and ours is COPYING.... PLAIN COPYING... We should keep that in context before we even start comparing... When we do R&D, we go to unknown territories... but not for COPYING...


  26. I wish India had invested similar amount in building a civilian aircraft instead. We could have done what Brazil did with Embraer. That would have provided a broader industrial base with more payoffs. Manned fighters are getting outdated due to huge advances in UAVs and missiles. Civilian aircraft are going to be in increasing demand.

  27. Posting Pogula's post from BR in full.

    America is the birth place of flight... starting a century ago. We got our independence hardly 64 years ago. And now, they have a mere 15 to 20 years lead over us. It surely looks like we are catching up, despite our government's lack of long term vision in defense R&D. So, I do not see why people whine so much!

    Also, please look at the track record of America's major defense companies over the past 3 decades. It is appalling.

    Case in point: The F-22 Raptor...
    Went from 750 fighters at $11 Billion with IOC in 1994 to 187 fighters at $70 Billion with IOC in 2005.
    That is a 7-fold cost over-run with Quadrupled decrease in numbers with a time delay of 11 years.
    Total project time? --> 1979 to 2005 (IOC) --> over 26 years!!!

    Feasibility study: 1979
    Planned IOC: 1994
    Planned Units: 750
    Program cost: $11 Billion
    ASR issued: 1981
    RFP issued: 1986
    1st R&D review: 1990
    Revised IOC: 1996
    Revised units: 648
    Revised cost: $18 Billion
    Design choice: 1991
    2nd R&D review: 1994
    Revised IOC: 2003
    Revised units: 442
    Revised cost: $26 Billion
    First Flight: 1997
    3rd R&D review: 1997
    Revised IOC: 2004
    Revised units: 339
    Revised cost: $48 Billion
    IOC tests: 2003
    4th R&D review: 2003
    Revised IOC: 2005
    Revised units: 277
    Revised cost: $62 Billion
    IOC: 2005
    4th R&D review: 2006
    Revised units: 187
    Revised cost: $70 Billion

    Source: & others.

    Now, compare this to HAL/ADA effort, skipping a whole generation of R&D efforts, starting in 1983 and achieving an IOC for LCA-Tejas by 2011 --> a project time of over 27 years and a total budget of less than $1.5 Billion.

    Where is the huge difference in capabilities? The generation gap is a direct result of the 60 year head-start US had in this field, even if we ignore the lost decade of Indian aviation, in the 1970s.

    EDIT: Also, if one feels the F-22 program was an exception, you just need to look at the F-35, V-22 and Zumwalt programs (the list does not end there).

  28. 18 MARCH 2011 05:55 posted a very good detailed view an eye opener for critics of India military indigenous development program. You cant schedule or estimate budget in defense project they usually overrun and overbudget because whatever is build is new!! To get latest you have to spend time and money! It took 40 complete years to US to build their first tank!! But for over pathetic anti national foreign paid media if it is US then 40 years means 4 months but if its India 25 years means 50years!! Please, people dont go with reports of newspaper like Toilet Paper of India(TOI).


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