Safran vs Rolls-Royce: The AMCA engine race that could shape India's aerospace autonomy

Forty Years, Three Thousand Crores, Zero Engines Flying: India's AMCA Engine Race is Already Lost.

The Kaveri engine — India's crown jewel of aerospace autonomy — is dead. Not officially. Dead in the only way that matters: no Tejas fighter jet in the Indian Air Force flies on Kaveri power. After four decades, nine prototypes, and a budget overrun so staggering it would make any MSME founder weep, the project that was supposed to prove "atmanirbhar" manufacturing has become a monument to how not to run a defence contract. And now, as the AMCA fighter jet engine race splits between Safran and Rolls-Royce, the actual message being sent to MSME manufacturers in India is brutal and clear: don't bet on government timelines, don't count on repeat orders, and don't believe the "Make in India" narrative until you see operational aircraft in the sky.

What Actually Happened

In 1989, India's Gas Turbine Research Establishment (GTRE) launched the Kaveri engine program. The mission was simple on paper: develop an indigenous turbofan engine for the LCA Tejas fighter jet. Simple on paper. The execution? A masterclass in how government contracts can bleed suppliers dry while producing nothing.

The numbers are damning. Three thousand crore rupees — minimum. Overruns of 642 percent. Four decades of development. Nine complete prototypes built and tested. And as of 2024, not a single Tejas aircraft powered by Kaveri is operational in the Indian Air Force. The aircraft flies, yes. But on General Electric engines imported from the US. The indigenous engine that was supposed to define Indian aerospace capability remains confined to test beds and PowerPoint presentations. Meanwhile, the tier-2 vendors who won subcontracts in 1998 — small manufacturers who believed in the timeline, invested in tooling, hired skilled workers — went bankrupt by 2010 waiting for repeat orders that never came. The government moved at government speed. These MSMEs couldn't survive that pace.

What This Means for India

Here is what the AMCA engine race announcement really means: India has officially conceded that building advanced aero-engines at scale is not something it will do domestically in the next 15 years. Safran will supply engines. Rolls-Royce will supply engines. Both companies will win contracts worth thousands of crores. And India will have 50, 100, maybe 200 AMCA fighters in service by 2035 — all dependent on foreign engine supply chains. Call it "partnership." Call it "technology transfer." The truth is simpler: India couldn't finish the job, and someone else had to step in.

For MSME manufacturers, this is the real lesson. The defence contracts that look juicy in government tenders are often traps disguised as opportunities. A subcontract in 2001 promised repeat business for 20 years. By 2012, the program was in shambles, and you had capacity built for orders that never arrived. The payment cycles stretched from 90 days to 180 days to "pending approval from ministry." Working capital dried up. Good engineers left for private sector jobs. The company downsized, pivoted, or closed.

This is not unique to Kaveri. It is the pattern. And it is about to repeat with AMCA.

The Deeper Story Nobody is Telling

The Kaveri failure was not a technical failure. Engineers at GTRE are world-class. The problem was structural: government programmes operate on timelines that have nothing to do with manufacturing reality. A budget is approved for Year 1. By Year 3, it runs out. Parliament questions it. The program is frozen for two years. It resumes with different leadership, different priorities, different oversight. A private company in the same situation would either kill the project or throw resources at it. Government has a third option: let it limp along indefinitely.

But here is what is worse. The tier-1 contractors — Hindustan Aeronautics Limited, Bharat Electronics Limited, others — learned the lesson well. They stopped trying to genuinely indigenize critical components. Instead, they import 70 percent of content, assemble 30 percent domestically, slap a "Made in India" sticker on it, and call it indigenous manufacturing. This is not malice. This is survival. Long-term supply chain bets on government timelines are suicide. So they hedge. Import the risky stuff. Manufacture the simple stuff locally. Everyone is happy except the MSME ecosystem, which never got to build real capability.

What MSME Founders Must Do Now

First, stop waiting for defence contracts as primary revenue. Build capability in civilian aerospace, automotive, industrial equipment. Defence should be 20-30 percent of revenue, never the core. A subcontract for a government program should be a bonus, not a business plan.

Second, when you do bid on defence tenders, build in a 18-24 month payment cycle into your cash flow model, not the 90-day cycle quoted in the RFQ. Assume timelines will slip by at least 40 percent. Price your bid accordingly. MSMEs that bid on government rates and government timelines will go bankrupt. Bid on realistic rates and timelines.

Third, invest in certification