IAF operates about 80 (four squadrons) of these aircraft in its fleet and due to the recurring problems in their engines, it had to ground all of them after a crash about two years ago.
"We are planning to phase out the MiG-27s, of which around 80 are still in service, by the year 2017," senior IAF officials said.
IAF has deployed two squadrons each of the aircraft in Jodhpur in Rajasthan and Kalaikunda in West Bengal at present.
About two years, a study was conducted to check the problems in the engines of the aircraft and it was found that the R-29s engines have developed some defect which was very difficult to be corrected, they said.
After the report, IAF took a considered decision about retiring these aircraft from operational service in a phased manner, the officials said.
"The first to be phased out would be the two squadrons based in Kalaikunda and then by 2017, the remaining two deployed in Jodhpur would also be on their way out of the force," they said.
The squadrons based in Jodhpur had undergone upgrades at Hindustan Aeronautics Limited recently and that is why they have more life left in them, the officials said.
IAF is also planning to phase out the crash-prone MiG-21 combat aircraft around the same timeframe. MiG-23 fighter and bomber aircraft which were inducted in the 1980s have already been phased out.