Boeing is to build a $100m unit for Air India to maintain 787 aircraft on order from the airline.
The air carrier is expected to receive its first 787 Dreamliner by the second quarter of 2011.
The 787 is a twin-aisle, mid-sized aircraft with a capacity to seat 330 people. It has a range of 8,200nm.
The maintenance, repair and overhaul (MRO) facility will be built in Nagpur in two to three years and will also service Boeing 777s.
The aircraft recently underwent initial airworthiness testing and its first delivery is due in the final quarter of 2010 to All Nippon Airways.
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