European aerospace giant Airbus has clinched a landmark $3 billion deal to make military aircraft for India in partnership with local conglomerate Tata, the defence ministry said Wednesday.

Airbus has been lobbying for nine years for the tender to make 56 military transporters for the Indian Air Force.

As part of the joint-venture agreement, India will import 16 Airbus Defence and Space aircraft made in Spain within two years of the contract being signed.

The remaining 40 Airbus-designed aircraft will then be manufactured locally by Indian conglomerate Tata over 10 years.

"This is the first project of its kind in which a military aircraft will be manufactured in India by a private company," the Ministry of Defence said in a statement.

The ministry described the deal as a "major boost" to the government's "Self-reliant India" campaign. 

India's Hindu nationalist government has stepped up efforts in recent years to reduce the country's dependence on imports and to create jobs.

The Airbus deal is expected to create 600 manufacturing jobs and another 6,000 indirect jobs for Asia's third-largest economy.

Each C-295MW transporter will also come fitted with Indian made electronic warfare systems.

With India in a decades-old rivalry with Pakistan and tensions increasing with China, New Delhi has spent heavily on modernising its ageing military infrastructure. 

The expenditure includes $9.4 billion on Rafale fighter jets from French firm Dassault.

At least 26 have been delivered and 10 more are expected by the end of 2021, authorities say.