NEW DELHI: European aerospace giant Airbus and India's Mahindra group have inked a deal to jointly build helicopters as the Indian government moves to upgrade the country's ageing military hardware, the companies said.

The joint venture will be set up in the coming months, “aiming to become the first private manufacturer of helicopters in India”, the companies said in a statement late Friday.

“The joint venture will be dedicated to supplying the Indian armed forces with Made-in-India, state-of-the-art helicopters of high reliability, quality and safety standard based on combat-proven platforms,” Guillaume Faury, president and CEO of Airbus Helicopters, said in the statement.

India is in the midst of a vast defence modernisation programme worth some $100 billion, partly to keep up with rival neighbours Pakistan and China.

Prime Minister Narendra Modi's right-wing government, which stormed to power last May, has approved a string of contracts for new military hardware that had stalled under the previous left-leaning Congress party.

Modi, a hardline nationalist, also wants to end India's status as the world's number one defence importer and to have 70 per cent of hardware manufactured domestically by the turn of the decade.

Last August, his government lifted the cap on foreign investment in defence to 49 per cent from 26 per cent.

The Airbus-Mahindra joint venture will place bids for reconnaissance and surveillance choppers, naval utility and naval multirole helicopters.

“Together, we will produce India's next-generation helicopters that will not only answer our country's defence needs but will also have the potential for exports in the future,” said SP Shukla, chairman of Mahindra Defence Systems.

The companies did not spell out how much they would invest under the deal.