The question will MoD bite. Combined with Honeywell engine project, this time by HAL, and if the 40 MKI's materialize, the new share holders might see some green here.
@randomradio
The MKIs in the IAF are at overcapacity. The IAF has no need for more than 230 jets. They bought 42 more out of desperation because there was no movement on the LCA and Rafale front. They will be fine even if 40 MKIs crash over the next 10 years, let alone add 40 more to the fleet. The IAF doesn't want more.
It takes 3 years to produce the jet. What HAL is proposing is they will import 40 CKDs and then assemble it. This assembly time is 2 months. So this is not HAL talking, it's RBE talking. The Russians want to sell more MKIs that's basically produced in Russia. Out of the 272 MKIs we purchased, only 60 were produced by HAL, the rest were either flyaway or kits from Russia. Obviously, there is no benefit to this arrangement from the industrial perspective either.
Also, HAL wants IAF to buy 40 MKIs because they don't want DRAL to start production of the Rafales in India with the second tranche of 36 that IAF will order next year (by 2020).
Dassault plans to produce 2 Rafales in India using their own funds (along with Reliance of course) in order to train the Indian workforce in manufacturing the jet. And this is not kits assembly. They want to develop their facilities here to the point where the entire jet can be built from scratch in India. Dassault hopes to get the IAF's order of 36 and IN's order of 57 and set up a full production line for 93+2 jets. Those 2 jets will also be used as prototypes for future development. During MMRCA, Dassault and Snecma were willing to transfer 100% of their technology to produce 100% of the airframe and engine in India. So you can expect them to aim for the same with DRAL.
Do you see why HAL is threatened? They are actually pushing for a direct production deal for Mig-35s.
40 more MKIs is extremely unlikely. Also, the IAF is not so desperate today that they will buy more MKIs without AESA radar and other advanced technologies, which will jack up the prices to match the Rafale's anyway.
As for HAL, they are fine with what they have right now. 123 LCAs already. 201 MCAs will be coming up next. So they will have an order book for advanced jets for the next 20 years. And FGFA is very likely still active. HAL will likely absorb the Ghatak also. Let's not forget the ongoing M-2000 and Jaguar upgrade programs and the very expensive Super MKI program that will follow. HAL has enough on their plate. Anything else is just pushing for a monopoly.