BAE Systems has declined to comment on a report that it is in talks to set up a joint venture with Hindustan Aeronautics to manufacture Hawk training jets in India for the global market.
The state-owned Indian company is already making 42 Hawks under licence in Bangalore as part of an pound 800m order to supply the Indian air force with 66 fighter trainers and train its pilots.
The order is part of a pound 1.1bn deal signed in 2004 to train Indian air force pilots, initially in the UK.
Mint, an Indian business newspaper, has reported that the two companies are carrying out a feasibility study for a joint venture to make and service the aircraft - citing an e-mail received from Ashok Baweja, Hindustan Aeronautics chairman.
The Indian company told Mint the proposal was at an initial stage.
BAE said on Tuesday that it did not comment on rumour or speculation.
However, a closer partnership between the two companies could help BAE win an order from the Indian navy, which is looking to purchase a new jet trainer.
If the navy followed the air force lead in choosing Hawks, Hindustan Aeronautics would manufacture more aircraft.
The UK company delivered the first two of the 24 Hawks being built at Brough, Humberside, in November with the rest close to completion.
Delivery of the Bangalore-manufactured jets begins this year for completion in 2010.
More than 800 Hawks, used by the Royal Air Force and the US navy, have been sold to 19 countries.