KOLKATA: Himachal Futuristic Communications (HFCL) will shortly float a joint venture company with a global partner to manufacture defence electronics and communication systems in India, a person aware of the development said.

The homegrown telecom gear and optic fibre cable maker had recently announced plans to diversify into the defence gear manufacturing space, which is slated to grow into a $50-billion opportunity in the next five years, according to experts.

HFCL is in advanced talks with some Tier-1 global defence electronics makers for the proposed joint venture (JV). “HFCL is likely to soon zero in on a foreign partner for the proposed JV, and will be the majority stakeholder,” the person cited earlier told ET. The proposed JV will include a technology-transfer pact, he said.

Foreign ownership in defence JVs is capped at 49 per cent.

HFCL plans to manufacture high-end defence electronics and critical infrastructure security systems at its existing factories in Solan and Chennai, and at its upcoming plant in Gurgaon, the person cited earlier said. The Guragon plant is likely to be operational in three months.

The critical infrastructure security gear will be meant to secure India’s defence establishments, including air bases and cantonment zones. HFCL has bagged industrial licences to locally manufacture a host of defence electronics products, including radars, night vision devices, electronic warfare systems and radio communications equipment.

HFCL chairman Mahendra Nahata declined to comment on the defence JV-related discussions or on the identity of potential partners.

Nahata, however, said: “HFCL is strongly committed to the Modi government’s ‘Make In India’ drive, and would locally manufacture the gamut of defence electronics equipment, that was, hitherto, being imported”.

The company, he said, has recently bid for supplying equipment for a secure wide area network for the armed forces. “Cisco and Microsoft are our technology partners for the Army Wide Area Network (AWAN) project for which HFCL has bid,” said Nahata. Further, he said, HFCL would manufacture communications and signalling equipment for the railways at its telecom factories.

Over the next three to five years, the company plans to invest about Rs 500 crore in augmenting existing manufacturing lines for locally churning out specialised electronics gear for both the defence and railways sectors. The funds would be raised through a combination of internal accruals and debt. At present, HFCL’s revenues come entirely from the telecom gear business, but in the next three years, Nahata expects as much “as 40 per cent of annual revenue to stem from the new defence and railways verticals”. The company has a turnover of Rs 2,500 crore.