Saab and its US competitor Lockheed Martin have emerged as the frontrunners to supply single-engine combat planes to the world's largest defence importer which wants to revamp its Soviet-era military hardware.
Together with the Adani Group, Saab will bid to make about 100 single engine fighters, a contract worth nearly $15 billion, a person familiar with this deal told the AFP news agency.
“This has been in the works for the last several months,” the source said.
A formal announcement of the tie-up is likely on Friday.
Saab's proposal comes amid a push by Prime Minister Narendra Modi to reduce India's reliance on expensive defence imports as it seeks to bolster its military in the face of China's growing clout in the region.
Modi's government has raised the limit on foreign investment in the defence sector and encouraged tie-ups between foreign and local companies under a 'Make in India' campaign where the Indian partner will remain the majority stakeholder.
India currently imports at least 90 percent of its defence equipment including parts for assembly.
On Thursday India reported a slump in economic growth to 5.7 percent for the first quarter of the current financial year, adding pressure on Modi's government as it tries to create jobs for the tens of thousands joining the work force every month.
Deals to build defence equipment in India would help boost job creation.
Europe's Airbus Group, angling to sell its Panther helicopters, has said that if it wins a contract worth several billion dollars spanning at least a decade, it would make India its global hub for the multi-purpose helicopters. The company currently builds them at Marignane in France.
Germany's ThyssenKrupp Marine Systems and France's Naval Group are also eager to compete for a contract of up to $10 billion to build submarines in the South Asian country.