The government is in early talks with top global helicopter makers and their Japanese partners on a deal worth around $2 billion to build transport aircraft for the Self-Defense Forces and for sale overseas, sources said.

The talks, which began in earnest over the past two months, represent another milestone in Prime Minister Shinzo Abe's bid to nurture a domestic weapons export industry that would also bring down Japan's defense procurement costs at a time of rising tensions between Tokyo and an increasingly assertive China.

Abe has eased decades-old restrictions on arms exports and is looking to give the SDF a freer hand in conflicts by changing the interpretation of the pacifist Constitution.