The value of the aerospace "self-reliance" initiative was not simply the production of an aircraft, but also the building of a local industry capable of creating state-of-the-art products with commercial spin-offs for a global market. The LCA programme was intended in part to further expand and advance India's indigenous aerospace capabilities.

In the early eighties, it was realised that no organisation existed which had the total capability to develop such an aircraft all on its own. The last time an indigenous fighter aircraft, the HF 24 flew was in 1961. Since then, the HF 24 assembly line had been shut down and the design team had been wound up. The only way left was to develop an aircraft from scratch.

To better accomplish these goals, the government of India in 1984 decided to establish the Aeronautical Development Agency (ADA) to manage the LCA programme. Hindustan Aeronautics Limited, (HAL) was to be the principal partner with participation of various DRDO & CSIR Laboratories, Public & private sector industries and academic institutions.