"The company will be a private limited company initially with a shareholding of 51 per cent from Alcatel and 49 per cent from C-Dot," Defence Minister Pranab Mukherjee said after a Cabinet meeting.
The centre would provide opportunities to 300 Indian professionals to take part in advanced global research facilities.
C-Dot Alcatel Research Centre would be set up at a cost of Rs 212 crore, out of which Rs 106 crore (Rs 1.06 billion) would be in the form of equity.
"The government will provide Rs 54 crore (Rs 540 million) to C-Dot to make equity investment in the proposed joint venture over a period of three years", Mukherjee said.
Out of the Rs 54 crore (Rs 540 million), government would give Rs 13 crore (Rs 130 million) in 2005-06, Rs 26 crore (Rs 260 million) in 2006-07 and Rs 13 crore (Rs 130 million) in 2007-08.
The centre would also give C-Dot Rs 52 crore (Rs 520 million) loan over a period of four years starting 2006-07 for giving shareholder loan to the JV.
This centre would work on broadband wireless solutions initially on Wimax technology suitable for rural areas, which would help in faster implementation of e-governance, e-education, e-health, e-agriculture, and tele-medicine and initiatives in the rural sector, he said.
The cabinet gave approval for the joint venture agreement as well as technology transfer and license agreement.
The centre would be set up within three months and the initial project would encompass the development of customer premises equipment compliant to Wimax technology, the minister added.