While Bangalore based state-owned Hindustan Aeronautics Limited (HAL) will fork out $300 million, Russia's United Aircraft Cooperation (UAC) will invest a similar amount for the joint venture which will start rolling out the aircraft by 2017.
Voice of Russia radio said the joint venture coming up with fifty-fifty equity would develop the aircraft at Aviastar-SP plant based in Ulyanovsk city on Volga.
The Indian Air Force is expected to order at least 35 and Russian Air Force as many as 100 medium lift transport aircraft.
In its basic configuration the new transport aircraft will have a payload capacity of 18.5 tonne of cargo and can fly up to a a distance of 2500 km in any climatic conditions.
The aircraft is being designed to also operate from high altitude mountain airstrips, according to information posted on UAC website. India hopes that the new medium lift transport aircraft will replace its ageing fleet of 104 AN-32 aircraft.