The first plane will be sent to the Southeast Asian nation this year, with the remainder scheduled for delivery by 2014.

"This is a proud moment for our country as well as for the Indonesian aerospace industry," said Indonesian Defence Minister Purnomo Yusgiantoro, at the signing of the deal at the Singapore Airshow.

"The C-295 provides the ideal capacity to respond to Indonesia's current and future military and humanitarian transport needs," he added.

The model is a medium-sized transport plane which can be configured for different operational purposes such as ground surveillance, anti-submarine warfare and search and rescue operations.

The planes will be used for "a variety of roles including military, logistical, humanitarian and medical evacuation missions," according to a statement.

Yusgiantoro did not rule out future purchases of the C-295, saying other branches of the armed forces were interested in the plane.

"The police for instance... are also interested in this. And you know that (the) 295 version that we ordered now is for the Air Force, and probably the army is also interested," he said.

The deal includes a collaboration between state-owned aviation firm PT Dirgantara Indonesia (PTDI) and Airbus Military, with Indonesia manufacturing parts for the C-295.

The partnership will allow the Indonesian firm to "grow its aerospace business as a tier-one supplier," said PTDI Chief Executive Budi Santoso.

"This will position PTDI on the global aerospace scene and allow us to enhance our skills and workforce," he added.

Indonesia's defence budget totalled $6.39 billion in 2011, ranking second in Southeast Asia behind Singapore.

The aircraft, which is in the prototype phase of development, is a modernized version of the Mi-8/17, the export variant of the Mi-8, which first came into service with the Soviet military in the 1970s and which could be used as a gunship as well as a troops and cargo transport.

More than 12,000 earlier Mi-8/17s are in use around the world.

"Russian Helicopters have become a permanent exhibitor at HeliExpo, one of the best platforms in the world for demonstrating new models and sharing industry achievements," Russian Helicopters Chief Executive Officer Dmitry Petrov said.

"We have decided to showcase the new Mi-171A2 in the USA in addition to the Ka-32A11BC that is already known in North America.

"I am confident that the Mi-171A2 will help Russia retain its leadership in the medium helicopter class, offering current and future customers all over the world unsurpassed performance, reliability, and safety that are the traditional advantages of rotorcraft of Russian make."

The Mi-171A2, which is expected to be certified in 2014, features new, higher power output engines, a new composite bladed rotor system and an enhanced transmission system.

Russian Helicopters said the aircraft also features an integrated avionics suite in which flight data is displayed on large screens.

In all, more than 100 improvements -- including those suggested by Mi-8/17 customers -- have been made over the Mi-8/17 and the earlier Mi-171 produced by Ulan-Ude Aviation Plant and which is operated 30 countries.

Mi-171A2 is under development by Mil Moscow Helicopter Plant, which is building the aircraft prototypes. It is expected to receive certification in 2014. The aircraft will be capable of carrying as many as 37 troops, in full equipment, on troop seats or 26 passengers on regular seats.

Its cargo compartment capacity is more than 8,800 pounds and an equal weight can be carried on a sling.

In addition to troops/passenger and cargo transport, the aircraft is suitable for missions such as firefighting, casualty treatment and medical evacuation and search-and-rescue missions, the company said.

Russian Helicopters JSC is a subsidiary of UIC Oboronprom, which in turn is a part of Russian Technologies State Corp. It is helicopter production powerhouse, with five production facilities, two design organizations, repair facilities and an after-sale service branch.

The aircraft was displayed at HeliExpo, an annual event sponsored by Helicopter Association International.