The Hindu newspaper said the defense company was poised to develop a center of competence in India that would eventually be integrated "as a supplier of the product developed there for its European and global markets."

India, among the world's top arms importers, plans to spend $30 billion on military contracts by 2014.

It wasn't immediately clear whether the development plan would include aerospace projects beyond the building of advanced fourth generation Eurofighter Typhoons.

"We will transfer some of our development projects, which we have in Europe for Eurofighter or other military aircraft in India, where we have set up a military research and development center in Bangalore," EADS Chief Executive Officer Stefan Zoller told The Economic Times.

Still, the newspaper reported that the company's research and development plan was independent of its competing for the manufacturing of 126 medium multi-role combat aircraft that the Indian air force is bent on acquiring.

The Typhoon is competing against Boeing's F/A-18 Super Hornet, the Lockheed Martin F-16IN Super Viper, the Dassault Rafale, the Saab Gripen and the MiG-35.

The tender was launched after India, vying to speed up arms purchases, pulled the plug on a multibillion-dollar deal for six Airbus refueling planes on grounds that the sale price was too steep.

The Economic Times reported that 18 of the 126 combat aircraft will be acquired in "ready-to-fly condition, with the remaining 118 being manufactured by the Indian defense behemoth Hindustan Aeronautics Ltd under technological transfer and license production, to replace its aging Russian MiG-21 fleet and enhance its strike capacity."

Should EADS get the deal, Zoller insists the development to take place will help boost the local economy.

"If we win the order," Zoller said, "the development of newer versions of Typhoon in India and the global market will result in the creation of about 20,000 direct jobs, as the bid involves the winner reinvesting 50 percent of the deal in India's defense manufacturing industry."

The new research and development center -- the third EADS facility in India -- is expected to kick off with 15 engineers, scaling up to as many as 250, industry experts said.

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