How do other companies operate with fluctuating demand? As far as I know from a French guy long ago, Rafale build capacity was around 20 a year but assembly workers did not sit around being paid to do nothing when Rafale build rate was 11 a year. Dassault had the imagination to cross-train assembly workers so that when demand for Rafale was slack they could work on business jets and vice versa.Suppose if HAL delivers 40 Tejas in 2 years with massive investment and workforce then they will have to sit idle for the next 2 year and have to pay salary with her own pocket. this would be a good example of bankruptcy. The whole defence ecosystem is largely dependent on how the Armed forces run it. Private player will also run away if Armed forces keep on giving piecemeal/ inadequate orders.
If as an industrial strategy India wants to enter the world market for fighters, I think that far more commitment and better minds will be required. Having a capacity to build 16-20 fighters a year is too small a capacity to supply IAF and to export as well. You might as well scrap the whole idea of exporting if any time you get an order the supply to IAF has to be reduced and aircraft are imported to supply IAF.