PARIS -- Defense ministry officials are in talks with the finance ministry to set up a government investment fund of "several million euros" to invest in small high technology companies, which carry a national sovereignty interest, Defense Minister Jean-Yves Le Drian said on Thursday.

The defense ministry is looking to extend the present support program for small and medium enterprises with the creation of "an investment fund dedicated to the small companies in the defense sector," he told the fifth annual Innovation Forum, a technology show case for the SME sector organized by the Direction Générale de l'Armement procurement office.

These firms are "gold nuggets … strategic for our innovation capability," he said. The fund will draw on "several million euros, identify strategic companies whose work carries an element of sovereignty and enter their share capital, to support and guide their development," he added.

The fund will be set up in the first quarter 2017, he said.

Such a government backing would address concerns of DGA chief Laurent Collet-Billon over American and Chinese companies looking to buy into small French defense companies, business daily Les Echos reported Nov. 23.

"I am talking to [finance minister] Michel Sapin," Le Drian told journalists when asked about the size of the defense investment fund.

On arms exports, 2016 French sales will be close to the €17 billion ($18 billion) of orders booked last year, Le Drian said. 

France won arms contracts worth €16.9 billion last year, buoyed by sales of the Rafale to Egypt and Qatar. India sealed a deal for 36 Dassault fighter jets this year.

Before his keynote speech, Le Drian visited stands in the Innovation Forum, which serves as a business-to-business show case for small companies looking to attract the interest of larger companies. Senior officers of the armed forces also attended.

Photonics was among the small companies that had received DGA research funding and was in the show marked out for "success stories." The company had drawn on silicon-based technology to allow troops and special forces to see colors at night with its Nocturn camera, built with Bertin Technologies. Airbus Defence & Space and Nexter have bought the equipment for assessment, while the BBC is using the sensor for night filming with National Geographic, project leader Damien Letexier said.

A DGA engineer, Christian Cambon, developed with €12,000 of official funding Flightex, an anti-skid coating for aircraft carrier decks, with the product marketed by Vitacolor and Monopol.

The DGA invests €730 million in research and technology studies, of which €50 million was earmarked in 2016 for the Rapid dual civil-military use program.

The defense industry has long lobbied for at least €1 billion of government funding of technology research studies.

DGA held the exhibition at the Ecole Polytechnique, an elite university backed by the defense ministry just outside the capital.

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