The HAL Light Utility Helicopter (LUH), along with its derivative, Light Observation Helicopter (LOH), was designed and developed by the Rotary Wing Research and Design Center (RWR&DC), one of the research and development (R&D) sections of Hindustan Aeronautics Limited (HAL), for civilian and military applications.

[8] Intended for military purposes, the potential contract was valued as a maximum of $750 million, of which 30 per cent was required to be invested within India under the government's policy of industrial offsets; HAL was also specified as to provide domestic maintenance activities for the fleet, who were reportedly also keen to manufacture further examples locally and further develop the selected type.

[11] Shortly after the selection of the Ka-226T to meet the requirement, during December 2015, an agreement was signed for the creation of a joint venture between Rostec, Russian Helicopters and HAL to manufacture the Ka-226T at a new factory to be built at Tumakuru, India.

[12] Meanwhile, HAL, which had long held ambitions to design and produce such an aircraft, sought to establish a partnership with a Western manufacturer with considerable technical knowhow in the field; reportedly, Eurocopter were viewed as being the favourite, having already worked with HAL for decades on previous ventures, such as the Chetak and Cheetal that were being replaced.

[13] However, the deal did not proceed as per reports in November 2023 and the entire requirement of light helicopters is expected to be fulfilled by indigenous designs.

[16] HAL promptly performed preliminary design studies on a prospective 3-tonne light helicopter, powered by a single HAL/Turbomeca Shakti turboshaft engine and possessing a range of up to 500 km (270 nm) and a payload capacity of up to 500 kg (1,100 lb).

In March 2010, HAL announced that it had decided to proceed on the LUH project alone, without any international partner participating in its development.

[18] At this point, the design of the LUH was officially frozen, but some elements, such as the powerplant, were yet to be selected for the type; additionally, the first prototype was anticipated to be constructed by the end of 2012 and the first flight was scheduled to occur during 2013.

[19]In March 2014, HAL promoted its LUH's capabilities as a civilian multirole helicopter, noting its ability to carry up to six passengers in an appropriate configuration.

The LUH flew at 6 km altitude Envelope Expansion Test at Bengaluru, a critical certification requirement, in December 2018.

HAL announced the completion of the final demonstration trial on 9 September 2020, which involved envelope expansion, performance, flying qualities, payload and landing capabilities at the highest altitudes of Siachen Glacier.

[33] The Final Operational Clearance (FOC) is planned for 2021, following tests focused on its automatic flight control system (AFCS).

[36] The Indian Coast Guard Director General V S Pathania lead a delegation of officials to Helicopter Division of HAL, during which he undertook a 45 minute sortie in LUH.

[38] The Army variant of LUH received the Initial Operational Clearance (IOC) from Centre for Military Airworthiness and Certification (CEMILAC) in the presence of Defence Minister Rajnath Singh at Aero India 2021 on 5 February 2021.

[38] As of January 2025, the flight control system software from the Safran Electronics is undergoing certification after which the aircraft will finally enter production.

[46] As of November 2023, a full fledged order for the three branches of Armed Forces is expected to be finalized within the next 18-20 months, with deliveries projected to commence from 2026 onward.

There delays were attributed to supply of flight control system or auto pilot software purchased from the Safran Electronics which has now been delivered.

[18][22] LUH is powered by a single 750 KW rated Shakti-1U turboshaft engine derived from Safran Ardiden, co-developed by HAL and Turbomeca.

[50] HAL on 20 October 2022, awarded the contract for design and development of night vision goggles for LUH to MKU.