This will be done under a recently signed contract between the two companies to co-produce the first batch of 17 such aircraft, sources in military aviation industry told the Press Trust of India.

While aero-engines and certain avionic items would be imported from Britain, the aircraft, to cost about eight million pounds a piece, would be fully assembled at the HAL aircraft complex in Bangalore, the sources said hinting at certain changes in the size and shape of the upgraded jet.

The Indian Air Force, which has already been flying Jaguar fighter-bombers for over one and a half decade, can now look for the upgraded version of the aircraft which were so far being directly delivered to India by Britain.

HAL has already been producing the older generation of Jaguars under licence from British Airways,but under the new contract, it would manufacture the state-of-the-art upgraded versions which would have advanced avionics and several other features to add to its punch.

Confirming the contract, British aviation industry officials, who were here to participate in Defexpo-99, said they were looking forward to a ``risk-sharing and cost-sharing partnership'' with HAL.

About upgrading the existing fleet of Indian Air Force Jaguars, the sources said BAE and another key British company, Marconi, were holding discussions with Hindustan Aeronautics Limited for ``mid-life update'' of these jets and on financial aspects.

``The basic thrust is on improving the autopilot'', they said, adding the feedback received after updating the Royal Air Force Jaguars would also be incorporated in the Indian warplanes.

The first batch of Jaguars, a long-range ground attack fighter, came to India in 1979. The IAF also has the maritime version of the aircraft.Fitted with the latest avionics, the aircraft also plays an earlywarning role and has `laser designators' that enable it to launch laser-guided bombs. According to Air Force sources, the Jaguars can make a big difference in the strike capability and also in manoevrability of pilots.