NEW DELHI — The Indian government on Wednesday approved a procurement request for 56 C295 transport aircraft from Airbus Defence and Space in Spain, under which 40 military planes will be manufactured in India by local firm Tata Group.

The approval was granted Sept. 8 by the Indian government’s apex armament clearance body, the Cabinet Committee on Security, which is led by Prime Minister Narendra Modi. This is the first project of its kind in which a military aircraft will be manufactured in India under technology transfer by a private company, according to Ministry of Defence release.

A $2.5 billion contract is to be signed with Airbus next month, under which the original equipment manufacturer will directly supply 16 military aircraft, and the remaining 40 will be manufactured in India by Tata Group subsidiary Tata Advanced Systems Limited, or TASL, said an MoD official.

A separate $500 million contract is to be signed later with TASL for performance-based life cycle product support of the Indian Air Force’s C295 fleet, he added.

“The project will augment domestic aviation manufacturing resulting in reduced import dependence and expected increase in exports,” the MoD release read.

The MoD had issued a global tender for 56 military transport aircraft in May 2013, and only Airbus Defence and Space submitted a bid, with potential competitor Antonov Design Bureau of Ukraine pulling out at the last minute due to Russian sanctions that interrupted its supply chain.

All 56 C295 aircraft will be inducted into the Air Force within the next 10 years. They are meant to replace 59 obsolete Avro HS 748 aircraft manufactured by state-owned Hindustan Aeronautics Limited, a service official said.

The C295 procurement was delayed by more than three years over price negotiations, the localization on Indian-made aircraft, offsets and performance-based logistics issues.

“All issues have been settled now,” the MoD official said.

A senior executive at TASL, who spoke on condition of anonymity because the individual was not authorized to speak to the media, said the company will establish a dedicated maintenance, repair, and operations and manufacturing facility in Bangalore, southern India, in the next two years. He refused to share further details.

Airbus executives in New Delhi would not comment for this story.

Vivek Raghuvanshi is the India correspondent for Defense News.

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