Hindustan Aeronautics Ltd has begun "advanced preparations" to build a facility to assemble Dassault Aviation SA's Rafale fighter jets in India, the state-run company's chairman R K Tyagi said on Wednesday.

Hindustan Aeronautics (HAL) is actively talking to India's defence ministry for an assembly role in the Rafale combat jet contract that New Delhi is preparing to sign, Tyagi said in Bangalore on the on the sidelines of the Aero India 2013 show.

India picked the Rafale combat jet for exclusive negotiations over a year ago after a hotly contested bidding for the Indian Air Force's requirement for 126 fighter planes.

The country is in the final stage of discussions with the French company ahead of signing a potential agreement worth more than $10 billion.

According to the government's tender, the first 18 planes will have to be supplied in a ready-to-fly condition, while the remaining jets must be produced in India in collaboration with a local company. The contract will have an option for India to order an additional 89 jets.

HAL is the only Indian company that manufactures fighter jets, including Russia-developed Sukhoi Su-30 MKI combat planes.

HAL has identified land in Bangalore for the assembly facility, Tyagi told The Wall Street Journal.

"We have also identified the investment plans," Tyagi said.
"So, as far as we are concerned, we are geared up. The moment the agreements are signed, we start moving forward."

India chose the Rafale over five fighter jets - Boeing Co's F/A-18, Lockheed Martin Corp's F-16, MiG Corp's MiG-35, the Eurofighter Typhoon and Saab AB's Gripen - for the contract.

Defence minister A K Antony said, "there was no question of delay" in giving the order, but there were several more steps that the government must follow before it could sign the final contract.

"Now the contract negotiations are going on. After that there are six-seven more layers of procedures that the deal has to go through," the minister said. "We cannot cut short the procedure. We should not compromise on transparency."