New Delhi, April 13 (IANS) Dubai-based infrastructure development firm Dodsal and Russia's heavy equipment engineering company Atomenergomash (AEM) have agreed to set up a manufacturing unit in India with an initial investment of $150 million.

"The two companies have agreed to pursue opportunities to jointly manufacture power equipment and components for power projects and to cooperate for the transfer of technology," the companies said in a statement.

After nearly one year of negotiations and a series of meetings in Mumbai and Moscow, top officials of the two companies signed a memorandum of understanding (MoU) for the project in Dubai Monday.

The project is likely to start commercial operations from the first quarter of 2013.

Dodsal Group and AEM, the engineering division of one of Russia's largest power firm State Atomic Energy Corporation, agreed to cooperate in manufacturing and supply of power equipment for nuclear and thermal power projects.

It will also supply equipment to the oil and gas industry in India.

"The joint activities take into account the bilateral agreements and international obligations of Russian and India," the statement said.

The agreement follows the acquisition of Chennai-based AE&E IDEA (India) Private Limited by Dodsal Group last month.

AE&E IDEA will now be merged into the wider engineering, procurement and construction business of Dodsal Group.

Dubai-headquartered Dodsal Group, which employs over 25,000 people, has implemented 22 projects in the Middle East, Europe, Africa, Indian subcontinent and South-East Asia.

With the acquisition of AE&E IDEA, Dodsal targets to expand its operation in the Indian subcontinent.