UH-1 Helicopter Japan
Members of Japan's Ground Self-Defence Force 1st Airborne Brigade boarding a UH-1 helicopter. Reuters

Airbus Helicopters, AgustaWestland, Bell Helicopter and their Japanese partners are competing to bag a $2bn contract to build transport aircraft for Japan's military that would also be exported.

Negotiations began some two months ago, according to a Reuters report.

The contract, to build the so called UH-X helicopters, could last for at least a decade and cost about $2bn (£1.2bn, €1.5bn).

Japan's UH-X helicopter project aims to replace around 150 of Japan's aging fleet of troop-carrying Huey helicopters, a Bell design.

Airbus Helicopters, a division of the European aerospace giant, has partnered with the Japanese defence contractor Kawasaki Heavy Industries.

Bell Helicopter, a unit of industrial conglomerate Textron has joined forces with Fuji Heavy Industries, the maker of Subaru cars.

AgustaWestland, part of Italy's Finmeccanica and Japanese trading firm Mitsui & Co have partnered to sell helicopters to Tokyo, to be assembled by Fuji Heavy, the report added.

The contract is part of a plan to develop a domestic military export industry that will also bring down Japan's defence procurement costs amid rising tensions between Tokyo and Beijing.

Japan decided to open up its arms export market earlier in the year in order to strengthen its domestic defence industry.

Hawkish Prime Minister Shinzo, in April, eased 50-year-old restrictions to limit the self-imposed sales ban to conflict zones and comply with UN resolutions.

Territorial Dispute

Japan and China are embroiled in a serious territorial dispute often escalated by rhetoric from the armed forces of both countries.

In 2013, the Japanese government said the country needs better defence against growing threats in the region, apparently referring to North Korea and China.

Japan's defence ministry lobbied hard in 2013 to acquire marines and drones. A July 2013 interim report also suggested that Japan acquire pre-emptive strike capability.