Hindustan Aeronautics will invest Rs6 billion ($108 million) in two Bengaluru factories for fighter aircraft and engines. The factories will be located at Chellaghatta, which is adjacent to HAL's other production facilities in the Indian city, the company says in a statement.
Indian media reports say one of the factories will produce airframes for the medium multi-role combat aircraft (MMRCA) that India plans to acquire. The other will produce MMRCA power plants.
The Indian government is in negotiations with France's Dassault for its Rafale fighter, which earlier this year attained so-called "L1-vendor" status in the 126-aircraft competition. This status signifies that Dassault was the lowest priced bidder for the requirement, allowing it to conduct exclusive negotiations with India's Contract Negotiation Committee (CNC) for the fighter deal. A CNC is comprised of a defence programme's key stakeholders, and in the case of MMRCA is likely to include organisations such as the Indian air force and HAL.
Indian Ministry of Defence
Under the terms of the MMRCA programme, 18 aircraft will be provided in a flyaway condition, with the subsequent 108 produced locally by HAL in India. New Delhi could eventually obtain up to 200 MMRCA aircraft.
HAL says its two new facilities will provide direct employment for 1,200 personnel and indirect employment for 3,600 more.
New Delhi sees the MMRCA programme as a crucial step in the country's efforts to further develop an advanced aerospace sector. In addition, when inducted the MMRCA will likely be the most potent and advanced aircraft in India's arsenal.
Analysts have estimated the value of the MMRCA contest as ranging between $10 billion and $20 billion. The Rafale's original rivals for the requirement were the Boeing F/A-18E/F Super Hornet, Eurofighter Typhoon, Lockheed Martin F-16IN Super Viper, RSK MiG-35 and Saab Gripen NG. All but the Rafale and Typhoon were eliminated in April 2011.
The new type will replace the Indian air force's obsolete MiG-21 fighters, which a defence ministry source says will begin to be phased out in 2014.