Parliamentary panel indicts HAL-IIT-Kanpur for failed UAV project worth Rs 9.54 crore

LUCKNOW: The Committee on Public Undertakings (CPU) has found that Hindustan Aeronautics Limited (HAL), in collaboration with IIT Kanpur, undertook the Rotary Unmanned Aerial Vehicle Program (Project 3) to develop a technology demonstrator for future surveillance platforms, without conducting a detailed market survey and demand assessment.
This led to a lack of defence contracts and estimated financial losses of Rs 9.54 crore, the committee, led by Baijayant Panda, BJP MP from Kendrapara, has concluded.
The committee, which consists of 14 Lok Sabha members, seven Rajya Sabha members, and four executives, reviewed the Comptroller and Auditor General of India (CAG) report for 2024-25 in detail.
The CPU was briefed on the subject by CAG representatives on 25th September 2024. It then took evidence from representatives of HAL on 24th October 2024. The committee also took oral evidence from representatives of the Ministry of Defence (Department of Defence Production) on the same day.
In its report on HAL's design and development (D&D) projects, CAG stated that Project 3 was sanctioned at Rs 23.18 crore by the HAL board.
CAG found that despite this significant investment, Project 3 failed to meet operational standards required for defence use, primarily due to its limited capabilities such as a payload capacity of only 2.5 kg, a one-hour endurance, and a range of just 8-10 km. These specifications were inadequate for defence applications, and the project lacked prior input from potential users, which led to the development of a platform that did not align with actual market needs.
Responding to CAG’s probe, HAL in a written reply to CPU stated, “Before committing resources to the full-scale development of large D&D projects, the company ensures a measured approach, and Project 3 was started as a pilot project, which gave confidence and experience for developing Project 4.”
However, not satisfied with HAL’s response, the CPU, in its detailed examination report tabled in Parliament three weeks ago, said, “Crucial performance assessments, like the ‘Lessons Learnt Report’, were not conducted, preventing HAL from refining project planning and risk assessment for future UAV programmes. The lack of market analysis and inadequate alignment with defence standards made the expenditure on Project 3 largely unproductive.”
The CPU recommended that HAL should establish a dedicated market research and demand forecasting division to assess potential buyer interest before investing in technology demonstrators, ensuring that projects are commercially and operationally viable. The CPU also recommended that HAL align all future pilot projects with existing defence procurement roadmaps to maximise contract potential and avoid resource misallocation.
The CPU further emphasised that HAL should ensure that Letters of Intent (LoIs) from potential buyers are secured before initiating large-scale UAV development projects to guarantee a clear market pathway for new products.