France-based Dassault Aviation and Reliance Industries are planning to build a new facility to produce wings for Rafale combat aircraft.
The combat aircraft was selected by the Indian Air Force (IAF) to meet its requirement of 126 fighter planes.
With an investment of around Rs10bn ($164m), both of the firms are planning a facility in Bangalore, India, reports the Press Trust of India citing industry sources.
Dassault will help Reliance build the facility, which is similar to its production facilities in France, as part of the plan.
The companies said that the defence ministry and other agencies concerned were in favour for creating the unit.
In 2012, India selected the Rafale plane of Dassault Aviation, after a five-year-long process in which five other companies had participated.
After long contract negotiations, the defence ministry and Dassault finalised the deal, which is valued at approximately Rs600bn ($9.8bn).
The Indian Government was quoted by firstpost.com as saying that the tender for the procurement stated that aerospace PSU Hindustan Aeronautics (HAL) will be the lead integrator for the project, while Dassault is interested in including Reliance as the main partner in production of the aircraft in India.
Dassault and HAL have started preparing the teams for implementing the project, after differences related to the issue were resolved.