India will buy 500 air-to-air missiles from European guided weapons manufacturer MBDA for its Mirage 2000 aircraft in a contract worth around $1.2 billion.

The deal was cleared by the Indian government's Cabinet Committee on Security at a meeting led by Prime Minister Manmohan Singh, a report in The Hindu newspaper said.

MBDA will supply its MICA -- interception and aerial combat fire-and-forget -- missiles starting this year and ending in 2021.

The company was set up in 2001 through a merger of the EADS company Aerospatiale-Matra Missiles with the missile operations of Finmeccanica and Matra BAe Dynamics.

In 2005 EADS's missile business in Germany, LFK-Lenkflugkorpersysteme, joined the MBDA consortium.

MBDA employs more than 10,000 people in development and manufacturing centers in France, Britain, Germany, Italy and the United States. Turnover in 2010 was nearly $1.4 billion through contracts with around 90 armed forces.

The Indian missile deal comes during a midlife upgrade of 51 of the Indian air force's Mirage 2000 aircraft under a $1.87 billion agreement signed with Dassault Aviation last year.

Work to modernize navigation systems, mission computers and electronic warfare and radar systems is being carried out in India at the facilities of Hindustan Aeronautics Ltd.

HAL also recently announced it has agreed with Swiss aerospace firm Ruag to perform engine and propeller upgrades for India's Dornier Do228 aircraft, a job that takes up to three weeks for each plane, Ruag said.

India is a major operator of the fixed-wing, twin-engine turboprop that can carry up to 19 passengers and be configured for maritime surveillance, border observations, fisheries control and environmental research. It can take off from unpaved runways and can operate with limited ground services.

The Indian air force operates 40 of the aircraft in the transport role and the Indian navy operates 26 in the maritime patrol role.

Dornier built more than 200 of its 228 aircraft in Oberpfaffenhofen near Munich from 1982-2002. Around 150 of the aircraft are operating worldwide.

Ruag, with headquarters in Bern, Switzerland, took over the manufacturing from Dornier in 2009.

In July, the Bangladeshi navy purchased two new upgraded Dornier 228NG aircraft from Ruag for maritime patrol and rescue missions. Ruag also is providing pilot and aircraft maintenance training plan for Bangladeshi naval ground crew.

The aircraft -- the first 228 purchase by Bangladesh -- will be delivered in mid 2013.

Comparable aircraft are the Antonov An-28, Harbin Y-12, Shorts SC.7 Skyvan and De Havilland Canada's DHC-6 Twin Otter.