The proposed joint venture is planned between DRDO and the French missile manufacturer MBDA under which they were planning to produce short-range surface-to-air missile (SR-SAM) systems for the Indian Air Force for the Maitri programme.
The Akash air defence missile system has already been developed by the DRDO indigenously and its development trials were completed successfully by the agency in Odisha recently.
The SR-SAM is also planned to be a project in the same class, highly placed sources said.
The IAF feels that when the indigenous system meets the requirements of the force, then there is no requirement for importing or co-developing a similar system, they said.
As per the proposed SR-SAM project, the IAF had to induct 49 Missile Firing Units (MFUs) of the co-developed missiles.
The IAF has already placed orders for eight squadrons of the Akash surface-to-air missile and it would require to place orders for another 25 squadrons of the weapon systems to meet its complete requirement of air defence missiles of this range, the sources said.
The induction would also save a lot of foreign exchange and help in expanding the indigenous missile production industry in view of the large orders to be placed, they said.
The negotiations for the SR-SAM project were started in 2007-08 and it was discussed in detail in parleys between the Indian and French government at highest levels during visits by senior dignitaries to each other's country.
During talks between French President Francois Hollande and the then Prime Minister Manmohan Singh in January 2013, the two sides had stated that negotiations for finalisation of the joint development programme have been concluded.
The indigenously developed Akash missile, with a 27-km range and an effective ceiling of 15 km, was recently test fired from Integrated Test Range in Balasore district in Odisha.
The Akash air defence weapon system has been designed, developed and led to production by DRDO for defending and protecting important assets of the country from penetrating aerial attacks.
The missile is planned to be inducted in to the Army and the Air Force.
It was developed by the DRDO as part of the integrated missile development programme under which Agni, Prithvi, Trishul and Nag missile systems were to be developed.