India is likely to finalise in the next few months a mega deal to procure 56 transport aircraft for the Indian Air Force at a cost of $2.5 billion, official sources said on Tuesday. The project will be implemented by aerospace giant Airbus along with an Indian entity as it will be implemented under the broad framework of the Make in India initiative in the defence sector, they said.

As per decisions, 16 C-295 transport aircraft will be supplied by the Airbus in flyaway condition while 40 planes will be manufactured in India. The procurement process for the aircraft has almost been completed and a final decision on the deal is likely to be made soon, said a source.

In a report, the defence ministry said the case of procurement of 56 C-295 from Airbus with participation of an Indian production agency for manufacture of 40 aircraft in India is at approval stage and a contract is likely to be signed in the near future. "The case is first of its kind which envisages participation of private companies and would prove to be a boost for our defence industry," it said.

The government is procuring the aircraft to replace the IAF's Avro planes. The defence ministry has been giving final touches to a number of long-pending procurement projects to boost India's overall military capability.

Last month, the defence ministry approved procurement of weapons and military equipment worth Rs 28,000 crore, including six airborne warning and control system aircraft, for the Indian Air Force.