India was the major combat operator of the Folland Gnat lightweight fighter and quickly realized its potential for further improvement. The result was the HAL Ajeet (Unconquerable), built from the experience obtained by license producing the Gnat and originally intended as an interceptor but eventually modified to include ground attack capability. Production included both new builds and Gnat conversions, there were numerous other changes between both aircraft such as improved control systems, zero-zero ejector seats, increased fuel capacity, and upgraded avionics as well as two additional underwing hardpoints for an increased weapons load. Unlike the Gnat, however, the Ajeet did not enter combat and was eventually retired in 1991. Futher development resulted in a trainer version which was unfortunately cancelled due to lack of government interest.

The prototype Ajeet was designed from the 214th production Gnat by HAL and known as the Gnat Mk. 2. It first flew on 6 March 1975 with production examples designated Ajeet Mk. 1. The Mk. 2 was a planned trainer which was not produced.