The joint venture will be announced at the Paris Air Show which begins on June 12, highly-placed sources told The Financial Express.

It remains a moot point whether IA will order the ATR-42. While civil aviation minister Ananth Kumar is keen on acquisition of small aircraft by IA, the top brass in the domestic airline are opposed to this deal. An internal study by IA indicated that operation of small aircraft will not prove cost effective.

IA is, therefore, keen to replace its ageing Boeings and Airbuses (all above 100-seaters) rather than go in for acquiring small aircraft.

The joint venture with Aerospatiale for the ATR-42 is the secondmajor European deal bagged by the Bangalore-based HAL in recent months. HAL is the only civil aircraft maker in India.

HAL already has an agreement with the Toulouse-based Airbus Industrie for joint production of A320 freighter aircraft wherby the two partners will co-operate in conversion of old A 320s into freighters.

HAL has formed close associations with Airbus Industrie and Boeing through the manufacture of aircraft doors and development of initial aircraft part prototypes.

Aerospatiale, which is now signing a JV with HAL, is one of the partners in Airbus Industrie. The other partners are Daimler Chrysler of Germany, British Aerospace and CASA of Spain.

Aerospatiale is a French conglomerate which manufactures civilian as well as defence aircraft, helicopters, missiles and satellite launchers.

The small aircraft of the ATR-42 type, which Aerospatiale and HAL are planning to manufacture, has generated considerable interest in India as airlines have woken-up to the use of these aircraft for feederroutes for the vast country.

Jet Airways, a private airline, has got an approval from the Government to induct five ATR-72 which are 64-seater aircraft. The airline will start operations of these aircraft on feeder routes in October.

Sahara Airlines is also keen to launch a regional airline which will operate with 30-seater turbo-prop aircraft. Sahara had earlier opted for ATRs but cancelled the order. It is now getting 12 Embraer 120 aircraft.

Jet will cover tourist circuits such as Delhi-Agra-Jaipur and feeder routes such as Vizag-Hyderabad, Delhi-Chandigarh with the small aircraft. Sahara plans to base 3 aircraft each in Delhi, Mumbai, Chennai and Clauctta to service the feeder routes.