The delay of Tejas was mainly due to snags in the Indian military itself.
To begin with, The Indian Air Force caused red tapism in the development of The LCA themselves. I'm not going to debate on the inner reason, be it kick-backs from the British, or they had their eyes set on other jets from The USSR or EU.
What the delay caused, was an increased price hike of US $ 21 Million per jet. The Govt. is not happy with it as that's the price tag of the Saab Grippen and The F-16, and The LCA is not half as advanced as those.
Just the 'delay' of research and development cost the Indian Govt. Rs. 200 Crores, not counting the intial investment of nearly US $ 2 Billion, and none of it consists of the cost of engine development. Indian economists predict the cost to go upto as much as $ 65 Million per jet.
The IAF wanted to scrap the project alltogether, but certain quarters in The Military still wants the project to cary on.
Idea of building their own jet was thought in 1981, the Concept of The Tejas / LCA was born in 1983. Although, with The GE Engine, the first jet might roll out of production around 2008, induction is expected between 2012-2015.
References:
http://www.aerospaceweb.org/aircraft/fighter/lca/
http://kuku.sawf.org/Articles/207.aspx
http://en.wikipedia.org/wiki/HAL_Tejas
