The Tata Group, which pioneered air travel in the country, has proposed to set up a Rs 500 crore (Rs 5 billion) defence and civil aerospace hub in Andhra Pradesh for manufacture of allied equipment, radar and satellite systems.

Tata group Chairman Ratan Tata has written a letter to Chief Minister Y S Rajasekhara Reddy indicating that Tata Advance Systems was keen to invest in the hub in the proposed special economic zone in Adibhatla village, on the outskirts of the state capital.

"The AP government is making 50 acres of land available for the Tatas at the proposed SEZ that will come up near the hardware park," Reddy announced at the inauguration of India Aviation-2008 at the Begumpet airport in Hyderabad on Wednesday.

Besides, the Lepakshi Aerospace Station and Academy will also come up at Chilamattur in Anantapur district.

The hub by Tata Advance Systems will be the first-of- its-kind in the country. Tatas are credited with launching the first scheduled airlines (Tata Airlines) in 1932 that was nationalised as Air India in 1953.

The Lepakshi Aerospace Station and Academy, on the other hand, will have largest integrated ecosystems for design, manufacture and maintenance of space vehicles and satellites, both civil and defence.

The LASAA will also be a support station for global space tourism adventures.

"LASAA will be 69 kms from Bengaluru, which has prestigious institutions like the Hindustan Aeronautics Limited, that could be collaborators in the future," Andhra Pradesh Industrial Infrastructure Corporation CMD B P Acharya said, adding that global aerospace and aviation players would be involved in R&D of both civil and defence aircrafts.

Set within the 5000-acre Lepakshi Knowledge Centre, the LASAA will also have a cluster of international universities, integrated medical park, international sports and entertainment city and aircraft training and simulation complex.