Swedish defence equipment producer Saab has proposed to build a fighter jet production facility in India. Saab and its US competitor Lockheed Martin are showing interest to supply around 250 single-engine combat planes to Indian Air Force which wants to improve and upgrade its Soviet-era military hardware.

The Saab proposal would develop the Gripen E fighter not just for India but for the international market.

This offer will set new standards in aeronautical engineering for years to come if India accept the proposal, Saab India chairman Jan Widerstrom said. This proposal has been placed just a few days after Lockheed Martin showed interest in having a production facility in India for its F-16 combat aircraft.

Saab's proposal also comes amid an initiative by Indian Prime Minister Narendra Modi to reduce India's dependence on expensive defence imports as it seeks to strengthen its military on the backdrop of China's growing might in the region.

India has increased the limit on foreign investment in its defence sector and is now encouraging tie-ups between foreign and local companies under a 'Make in India' program.

In the previous year India signed a contract to buy 36 Rafale twin-engine fighter jets for 7.9 billion euros.