It is currently possible to specify Windows, NavUserPassword or AAD in the launch.json file.
The problem is that the AAD option only works for Cloud deployments, not for on-premise.

That really lowers the advantages of using Azure Active Directory instead of Windows authentication, when working with an on-premise deployment. It practically means that the environment is not debugable...

So please look into enabling the AAD autentication option for on-premise deployments.
Category: Development
Needs Votes
Ideas Administrator

Thank you for this suggestion! Currently this is not on our roadmap. We are tracking this idea and if it gathers more votes and comments we will consider it in the future.

Best regards,
Business Central Team