New Delhi: French defence and aerospace major Thales and the city-based Samtel group Wednesday announced a joint venture to design, manufacture and sell avionics systems in the Indian market.

Samtel and Thales will hold 74:26 in the venture that was started with a capital of $12.5 million with more investments to be pumped in as the joint development efforts progress, officials of the two firms said at a press conference here.

Helmet-mounted sight and display, for use in defence and civilian aircraft, helicopters and fighters, will be the one of the main areas of operations for the new venture - named Samtel Thales Avionics.

"We will develop and manufacture the products within the new joint venture with the aim of creating truly Indian systems," said Francois Quentin, senior vice president for Thales in charge of aerospace activities.

"Thales is a truly local player in India and the next step will be to solidify this cooperation. It will be winning the first contract," Quentin said, adding that the Mirage 2000 upgrade for the Indian Air Force could be one potential customer.

The officials said the investment in the new venture may also serve to adhere to the offsets clause of the Indian defence establishment, under which 30 percent of the value of contracts has to be invested within the country.