The component-making section of an Indian automaker could soon be in the aircraft business as well.

Utility vehicle maker Mahindra & Mahindra's automotive parts unit is in talks with two Australian aerospace companies, reports said.

The Mint newspaper, citing a senior group official, said Mahindra Systech wants to acquire one aircraft component firm and is eyeing a joint venture with the other to build eight- and 14-seat planes.

"If we get it right, aerospace can do for Mahindra what Scorpio did," the paper quoted Hemant Luthra, president, systems and technologies at Mahindra & Mahindra as saying, according to Reuters.

The Scorpio is a successful SUV at the top of Mahindra's domestic vehicle range.

Luthra reportedly declined to name the Australian firms, but said one of them has been supplying components to Airbus and Boeing.

"If this deal goes through we will actually have something in hand that we can show the Boeings and Airbus of the world that this is our offset capability," he told the paper.

Under India's offset policy, foreign firms are required to source locally at least 30% of the value of defence equipment contracts exceeding INR3bn, the paper said.

Luthra reportedly said the acquisition would be finalised in the first half of 2009, while the joint venture could be decided in a few weeks.