India and Russia on Monday inked a $600 million deal to jointly develop and produce a multi-role transport aircraft (MRTA) for their air forces and for sale to third countries.
The agreement was among four signed in Moscow after Indian Prime Minister Manmohan Singh held talks with Russian President Vladimir Putin.
The two countries had last month signed an agreement on jointly developing and producing a fifth generation combat jet after Defence Minister AK Antony's talks in Moscow with his Russian counterpart Anatoly Serdyukov.
The MRTA project had been fine-tuned during Antony's visit.
India's Hindustan Aeronautics Limited (HAL) and Russian Rosoboronexport will form a 50:50 joint venture to produce the aircraft.
In real terms, however, Russia will not put any money in the project since its share will be met from the debt owed to it by India, defence ministry sources in New Delhi said.
"It is estimated that development and certification of the MRTA will take six years or less," the sources said.
"The envisaged requirement is for 100 aircraft for the Russian Air Force, 45 for the Indian Air Force (IAF) and a projected demand of 60 from third countries," the sources added.
This will make the MRTA the first aircraft to be exported from India. The two countries are also hoping to market in third countries the BrahMos supersonic cruise missile they are jointly producing in India.
With a payload of 15-20 tonnes, the new aircraft will perform multifarious roles like transporting cargo and troops, parachute dropping of soldiers, air ambulance casualty evacuation and air dropping of supplies.
The MRTA will also function as a mid-air refuelling tanker and can be modified to carry up to 100 passengers.
The IAF sees the MRTA as a replacement for its ageing fleet of 60-70 Soviet-era An-32 aircraft. Some 240 An-32s are currently flying around the world.