Nov. 20 (Bloomberg) -- Alstom SA, the world’s third-largest power plant builder, plans to set up a venture with Nuclear Power Corp. of India and Bharat Heavy Electricals Ltd. to supply equipment in India, three people familiar with the matter said.

Alstom, based in Paris, is in exclusive talks with the two state-controlled companies and an announcement is expected as soon as next month, the people said, declining to be identified because the negotiations are private. Spokesmen at the three companies declined to comment.

Bharat Heavy, based in New Delhi, and Nuclear Power agreed in April last year to form the venture with an overseas company to provide engineering, procurement and construction services. India plans to increase nuclear generation capacity 10-fold over the next decade after a U.S. accord lifted a ban on buying atomic technology and fuel.

“Alstom will make a good fit as a technology partner as nuclear power picks up in India,” said Abhineet Anand, an analyst with Antique Stock Broking Ltd., who has a “buy” recommendation on Bharat Heavy’s stock. “It is high time they did it.”

The venture will build boilers, turbines and generators of capacity higher than 700 megawatts for nuclear plants, one of the people said.

India plans to build nuclear reactors with U.S., French and Russian companies and increase installed atomic generation capacity to 40,000 megawatts by 2020, aided by the lifting of a global ban on nuclear trade with Asia’s third-biggest economy in September 2008. One megawatt is enough to power about 200 average middle-class Indian homes.

‘Zeroed In’

The two Indian companies have “zeroed in” on a European firm that will be offered about 30 percent equity stake in the proposed venture, former Bharat Heavy chairman K. Ravi Kumar said in an interview on Sept. 7. Kumar, who retired on Sept. 30, said talks had started with Alstom, Siemens AG, Skoda Power, a part of Skoda Holdings AS, and Russia’s OAO Power Machines before two of them were shortlisted.

Alstom India President Sunand Sharma, Nuclear Power Chairman S.K. Jain and Bharat Heavy Chairman B.P. Rao didn’t respond to e-mailed questions sent by Bloomberg. Alstom India spokesman Rachana Panda and Bharat Heavy spokesman Rohit Singh declined to comment when reached by telephone. Nuclear Power spokesman N. Nagaich wasn’t immediately available on the phone for comment.

Nuclear Power said in March it will borrow 3 billion euros ($4.5 billion) to fund a project to be built in partnership with Areva SA, the world’s biggest maker of atomic reactors.

The project at Jaitapur in western India will be the country’s first large-capacity plant using overseas equipment after the nuclear-trade ban was lifted.

To contact the reporter on this story: Gaurav Singh in New Delhi at gsingh31@bloomberg.net.

Last Updated: November 20, 2009 07:23 EST