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. Last Updated: 07/27/2016

India Bids $100M for Jet Stake

India offered Tuesday to invest $100 million in the Russian Regional Jet project, giving a major boost to the Sukhoi-led drive to develop a new short-haul passenger liner.

India's state-owned aerospace champion, Hindustan Aeronautics, or HAL, is ready to commit $100 million if it gets a 10 percent stake in the RRJ project, The Associated Press quoted outgoing HAL chairman N.R. Mohanty as saying in Bangalore.

The announcement came as Defense Minister Sergei Ivanov arrived in Delhi to discuss arms sales ahead of President Vladimir Putin's visit later this month.

The pledge also comes just weeks after French engine maker Snecma and Russia's NPO Saturn agreed to set up a $60 million joint venture to make components for the SaM146 engine that will power the RRJ family.

Overall Snecma plans to spend 600 million euros ($780 million) on engine development.

The civil aviation division of Sukhoi, best known for its fighter jets, which will seat between 60 and 95 passengers, has signed up nearly a dozen subcontractors for the project, including U.S. aerospace giant Boeing. It expects to have the jet ready to test fly in 2006 and start mass production a year later. Sukhoi plans to sell 750 RRJs by 2022.

Russia's No. 2 carrier, Sibir, last summer said it would buy up to 50 of the 95-seat version of the craft.

Sukhoi Civil Aircraft spokeswoman Olga Kayukova confirmed Tuesday that the company had received the offer from Hindustan Aeronautics, also known as HAL, but that "nothing has been firmed up yet."

Industry watchers are studying the project with interest, as a successful launch would go a long way toward reviving a ravaged industry that was once a world leader.

"One hundred million is an adequate sum. If it happens I will applaud this development," said Konstantin Makiyenko, deputy head of the Center for Analysis of Strategies and Technologies.

"It will help turn the Sukhoi Civil Aircraft from the sandbox it is now into an international consortium that will make the RRJ Russia's breakthrough into the global aviation market," Makiyenko said.

Yelena Sakhnova, a transportation analyst at United Financial Group, said getting India involved would open up a vast new market.

"India will offer its own market for the jet and those of its neighbors," she said.

HAL is already cooperating with Russian aerospace companies, producing Su-30 fighters under license and developing a multipurpose transport aircraft with privately controlled Irkut, which makes Sukhoi fighters for India.

India and China are Russia's two biggest export markets for arms.

India has bought $33 billion worth of Russian arms since 1960, according to state arms dealer Rosoboronexport.

Kommersant on Tuesday said New Delhi will negotiate $2 billion in new arms purchases during Ivanov's visit. The paper didn't say where it got the information, and the ministry declined to comment.

Makiyenko said the report probably referred to two Akula-class subs that have been negotiated for years. "That will give you the $2 billion," he said.