Very good move on the Government's part. It makes a lot of sense that LCA Mark II is built by private sector. The order can be split between HAL and private sector and two assembly lines can churn out the aircraft. This way HAL's current investment is protected, and a healthy competition is created.
LCA Tejas order will be very big. I feel that even 250 is too small a number.
India needs a fighter inventory of around 1500 aircraft between air force and navy. Bulk of this must be a smaller single engine fighter. The air force projections are simply not correct. India has 60 air force airbases and additionally at least 6 naval airbases should be maintained in addition to a/c carriers.
The naval airbases that need fighters are Porbandar, Goa, Karwar, Kochi, Vizag, Kolkata
South India needs several fighter squadrons at air force bases. Currently there are none. These are needed as reserves (in case attrition is too high in the north) as well as to protect attacks from south and east.
Several LCA squadrons are needed in central and east India - minimum are at Lucknow, Gorakhpur, Patna and couple of airbases in West Bengal.
India also needs two squadrons in Kashmir, and 2 squadrons in Gujarat.