During a four-day visit to Tokyo by Prime Minister Manmohan Singh, starting later today, the two sides are set firm up plans for Delhi to purchase the US-2, a domestically-developed aircraft used by Japan's armed forces.
The sale, reported by the Nikkei business daily, would be the first of a finished product made by Japan's homegrown defence industry since rules were imposed restricting the export of weapons systems and other equipment.
Experts say the aircraft must be classed as for civilian use if it is to comply with Japan's 1967 self-imposed ban on arms exports, part of the post-World War II anti-militarist drive.
The US-2, which was developed by ShinMaywa Industries and has been sold to the Japanese navy at a price tag of roughly 10 billion yen (USD 99 million), has a range of 4,700 kilometres and can land in seas with waves of up to three metres.
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ShinMaywa opened a sales office in New Delhi last year and has been promoting the plane there, a spokesman for the company said.
"We hear there is some demand from the Indian government but decline to comment further as we have yet to reach a contract," he added. The Nikkei said India is looking to acquire at least 15 of the aircraft.
The plane could be deemed to have a non-military -- for example, search and rescue -- purpose if "friend-or-foe" identification systems were disabled, officials said, making it eligible for export.
In 2011 Tokyo eased the decades-old ban on arms exports, paving the way for Japanese firms to take part in multinational weapons projects.