India’s largest public research agency, the Council of Scientific and Industrial Research, or CSIR, has approved Rs300 crore ($75 million) for its Bangalore aerospace lab to design an aeroplane that can carry 90 passengers on short flights, and compete with planes of Franco-Italian aircraft maker ATR in Indian skies.

National Aerospace Laboratories, or NAL, the CSIR lab focused on civil aircraft development, is building the regional transport aircraft, or RTA 70, as the project is called. It would use the money to design a digital concept plane in around two years. The money will also be used to improve infrastructure at the lab.

Once additional funding for the Rs2,000 crore project and its partners are firmed up, a prototype would be built and flown in four years, said Kota Harinarayana, Raja Ramanna fellow at NAL, who is spearheading the project.

The first prototype would be 70-seat plane. It is a family of aircraft that NAL is designing and will have three variants, a 70-seater, a 50-seater and an extended 90-seater later.

India’s civil aviation industry has seen a boom in recent years with budget carriers connecting metros and smaller cities, prompting the world’s largest passenger aircraft makers such as Europe’s Airbus SAS and US’ Boeing Co. to revise their projections in the country in the next two decades. India has 449 airfields, of which only 66 are in use by airlines and chartered operators.

At the same time, Asian countries such as India, China, Japan and Russia, which are investing for their aerospace industry, are building planes to carry passengers on short-haul routes of around 1,000km.

Russia’s state-owned Sukhoi Co., is building a Russian regional jet, in collaboration with Boeing and European aero engine maker Snecma. Japan’s Mitsubishi Heavy Industries Ltd is building a family of regional jets to carry 90 passengers, which is expected to be ready for service in 2013. China expects its 90-seater ARJ-21 commercial jet, built by China Aviation Industry Corp. to be ready by 2009.

In the next 20 years, there will be a demand for more than 5,000 planes in the 65-90-seat category, due to airlines upgrading from 50-seat planes, and transfer from mainline planes to regional jets due to higher fuel price and lower passenger yield, said Mitsubishi on its website.

Currently, Brazil’s Embraer or Empresa Brasileira de Aeronautica SA and ATR, a joint venture between Alenia Aeronautica SpA and EADS NV, dominate the category of less than 100-seat aircraft in the world, including India, followed by Canada’s Bombardier Inc.

India would focus on turboprop-powered planes passengers in short-haul routes for better fuel efficiency and passenger comfort.

A turboprop is a gas turbine engine used to drive a propeller in an aircraft.

“Fuel prices are not going to come down. With newer technologies, you can make a better plane than what has been built so far,” said Harinarayana, a former programme head of India’s light combat aircraft Tejas. He led it from the concept stage to flying two technology demonstrators of the fighter.

The new plane will have more composites, he said. It will use off-the-shelf electronic components that would be packaged for aircraft standards and embed micro-electrical mechanical systems (Mems), sensors that monitor aircraft health and reduce maintenance costs.

Globally, plane makers such as Boeing are using sensors to monitor structures in its delayed 787 plane. India has a base for Mems under the National Programme for Smart Materials (NPSM), a programme funded by India’s Defence Research and Development Organisation.

Analysts say India’s civil aeroplane project would help build its technologies and capabilities in terms of manpower, but efforts should be made to get rid of public sector inefficiencies that have plagued NAL’s Hansa and Saras aircraft projects.

“There is huge opportunity for such planes. The fear is that if you don’t build it in time, the plane would become obsolete and you will lose the market,” said N.R. Mohanty, chairman of the India operations of Textron Inc., the US maker of Cessna business jets and Bell helicopters. “For this, the private sector should be involved from scratch and deadlines set.”

NAL, which has built the Hansa two-seater trainer and Saras, the 14-seat passenger plane, plans to collaborate with global plane makers and Indian private firms for the regional plane project.

“We will involve private partners right from the concept stage. So they will be able to market the plane better,” said Harinarayana. He, however, did not elaborate.

“We need more investments in aerospace technologies. The market demand is there but there is also competition from other plane makers,” said Ajit Prabhu, co-founder and chief executive of Quality Engineering and Software Technologies Inc., a Bangalore firm that offers engineering services and manufacturing components for global aerospace firms.