India will now become a major producer of transport aircraft, Prime Minister Narendra Modi said on Sunday after laying the foundation stone of a manufacturing facility for C-295 medium transport plane for the Indian Air Force.

Modi said India is witnessing rapid economic growth including in the manufacturing sector as his government's policies are "stable, predictable and futuristic".

"Today India is working with a new mindset and new work culture," he said in his address at the ceremony in this city in Gujarat.

He said India, with its 'Make-in-India' and 'Make-for-World' approach, is enhancing its strength further and that the country has emerged as a major manufacturing hub globally.

The prime minister said the manufacturing of C295 aircraft in Vadodara will not only give strength to the military but it will also create an aerospace ecosystem.

Defence Minister Rajnath Singh described the occasion as a milestone in India's quest for becoming self-reliant in defence.

The aircraft will be produced by a consortium of European aerospace major Airbus and the Tata Group.

It is the first project of its kind in which a military aircraft will be manufactured in India by a private company.

The manufacturing unit will also cater for the export of the premier transport aircraft as well as for additional orders by the Indian Air Force.

In September last year, India sealed a Rs 21,935 crore deal with Airbus Defence and Space to procure 56 C-295 aircraft to replace the IAF's ageing Avro-748 planes that entered service in the early 1960s.

Under the agreement, Airbus will deliver the first 16 aircraft in 'fly-away' condition from its final assembly line in Seville, Spain within four years and the subsequent 40 aircraft will be manufactured by Tata Advanced Systems Ltd (TASL) in India as part of an industrial partnership between the two companies.

The 16 fly-away aircraft are scheduled to be delivered to the IAF between September 2023 and August 2025.

The first Made-in-India aircraft will be rolled out of the manufacturing facility in September 2026 and the remaining 39 will have to be produced by August 2031.

The foundation laying ceremony was attended by Defence Minister Rajnath Singh, Civil Aviation Minister Jyotiraditya Scindia and Gujarat Chief Minister Bhupendrabhai Patel among others.

IAF officials said the C-295 aircraft would be able to operate from Advanced Landing Grounds (ALGs) and even unprepared runways.

It is also the first time that the C-295 aircraft will be manufactured outside of Europe.

All 56 aircraft will be fitted with an indigenous electronic warfare suite to be developed by the state-run Bharat Electronics Ltd and Bharat Dynamics Limited.

After the completion of the delivery of 56 aircraft to the IAF, Airbus Defence and Space will be allowed to sell the aircraft manufactured in India to civil operators and export to countries which are cleared by the Government of India.

Defence Secretary Ajay Kumar three days back said the indigenous content in the plane will be the highest ever in India, and that 96 per cent of the work that Airbus does in Spain to produce the plane will be done at the manufacturing unit in Vadodara.

The C-295MW is a transport aircraft of 5-10 tonne capacity with contemporary technology. The aircraft has a maximum speed of 480 kmph.

It has a rear ramp door for quick reaction and para-dropping of troops and cargo. Short take-off and landing from semi-prepared surfaces is another of its features.

The aircraft is set to strengthen the logistic capabilities of the IAF.

Officials said the project offers a unique opportunity for the Indian private sector to enter into the technology-intensive and highly competitive aviation industry.

The defence ministry said manufacturing of over 13,400 detail parts, 4,600 sub-assemblies and all the seven major component assemblies of the aircraft will be undertaken in India.

It said various systems such as engines, landing gear and avionics will be provided by Airbus Defence and Space and integrated into the aircraft by the TATA Consortium.

With a proven capability of operating from short or unprepared airstrips, the C-295 is used for tactical transport of up to 71 troops or 50 paratroopers, and for logistic operations to locations that are not accessible to current heavier aircraft.

The aircraft can airdrop paratroops and loads, and also be used for casualty or medical evacuation.

The aircraft is capable of performing special missions as well as disaster response and maritime patrol duties.

The aircraft will be tested as an integrated system by the TATA Consortium. The aircraft will be flight tested and delivered through a delivery centre at the TATA Consortium facility.

The project is expected to generate 600 highly skilled jobs directly, over 3,000 indirect jobs and an additional 3,000 medium-skill employment opportunities with more than 42.5 lakh man-hours of work within the aerospace and defence sector.

Nearly 240 engineers will be trained at the Airbus facility in Spain for the project.