Wednesday, May 29, 2024

Aerospace & Defence Manufacturing To Be A Key Driver Of Maharashtra’s Push For A Trillion Dollar Economy

By Staff Correspondent

Maharashtra is the most industrialised state in India and is on the path to become the first sub-national economy to hit USD 1 trillion. Maharashtra holds the distinction of having the largest GSDP contributing a significant 14.5% to India’s GDP and being the country’s leading state in attracting Foreign Direct Investment (FDI). It is a result of Maharashtra’s progressive and sector-specific incentive policies which are consistently updated in line with the changing global economic dynamics and business scenarios and are constantly fuelling the nation’s economic engine.

Indian Government has been taking several policy initiatives under the ‘Make in India’ framework to encourage indigenous design, development and manufacture of defence equipment. The 2023-24 Union Budget outlays Rs 45,03,097 crore, out of which the   Ministry of Defence has been allocated Rs 5,93,537.64 crore, which is 13.18  % of the total budget. The total Defence Budget represents an enhancement  of 13% over the Budget of 2022-23. This 13% heightening over the last year’s budget demonstrates the government’s efforts to expedite the country’s self-reliance in defence manufacturing and technology.

Maharashtra is a major driving force in India’s Aerospace and Defence (A&D) sector and has made significant progress in the direction of strengthening the sector. The state was the first in India to frame a Defence Manufacturing Policy after the private investment was allowed in the sector. The state has also declared A&D manufacturing as the thrust sector in the “Package Scheme of Incentives”. As a result of these efforts, the state is contributing more than 20% to the country’s output in transport equipment, including aircraft, ships, and boats, and 30% to the national output in weapons and ammunition. The state is also home to 10 ordinance factories in India, the most in the country. It shows the state’s unwavering and exceptional commitment towards development of the A&D sector.

The state’s aerospace and defence industry stands tall on a robust foundation, supported by the well-established defence hubs of Pune, Nashik, Nagpur, Aurangabad, and Ahmednagar districts. These defence clusters provide a favourable environment for the indigenous development of combat engineering equipment, maintenance, repair, and operations (MRO), as well as manufacturing activities. This full-bodied ecosystem is now being further reinforced by the leading defence manufacturing companies in the state, such as Godrej & Boyce, Mahindra & Mahindra, L&T and Bharat Forge to name a few.

On top of that, the presence of DRDO labs and Defence Public Sector Undertakings (DPSUs) are providing a rich ecosystem for companies to develop defence products with advanced capabilities. This has made Maharashtra the leading manufacturer of advanced defence products such as BrahMos Fire Control Systems (FCS), Weapon and Missile Launchers, Radars and Surveillance Systems, Torpedo Launching and Support Systems, Composites, and all types of ammunition, as well as artillery guns like ATAG. Since Maharashtra manufactures such a variety of products, it is no surprise that the A&D industry finds the state to be full of strength and caters to its needs.

The Government of Maharashtra has always made significant efforts to support the aerospace and defence sector, launching several initiatives to foster a favourable ecosystem for the A&D industry. The Aerospace & Defence Manufacturing Policy 2018 is one such initiative that provides various incentives and facilitations to companies and aids to simplify regulatory procedures, reduce turn around times for approvals, and provide tax exemptions and subsidies to companies.

Maharashtra Industrial Development Corporation (MIDC)

MIDC is the Government of Maharashtra’s nodal investment promotion agency which plays a pivotal role in bringing investments and ensuring infrastructure development in the state. MIDC’s vast land bank of over 2.5 lakh acres makes  it one of the largest industrial land bank owners in the country. To date, MIDC has developed 289 Industrial Areas across the state and offers land for industries along with essential industrial infrastructure like roads, water, streetlights, effluent treatment plants, sewage treatment plants etc.

Highlights of Maharashtra’s Aerospace and Defence Manufacturing Policy 2018
Mega Projects X 20% of project cost or Rs. 100 Cr. (lower of two) shall be included as FCI incentives for Expenditure on the test range. X 20-40% water concession & 100% waiver on service charges & fire cess for units with BCC at 50-100%Anchor Funds X Eligibility: Mega Unit plus confirmed order of $100 Mn from MoD, etc. X Benefit: Land at 75% prevailing rate in MIDC areas in A &B category, and 50% prevailing rate in MIDC areas in other locations subject to 100 acres (maximum).
Promotion of CFCs X Assistance of 15% of cost subject to max Rs. 15 Cr. for investors with a minimum FDI of Rs. 100 in Aerospace & Defence.X Rs. 15 Cr. assistance to an SPV formed by 20 or more MSMEs in Aerospace & Defence manufacturing.Venture Fund X Up to Rs. 15 Cr. for common facility center under Maharashtra State Industrial Cluster Development Programme. X MIDC has created a fund of Rs. 300 Cr. to provide capital for MSMEs in Defence & Aerospace manufacturing.
Promotion of Nagpur MRO X Airlines setting up their Global hub and using MRO facilities at Nagpur will receive: X 50% reimbursement of VAT on Aviation Turbine Fuel (ATF)X 100% reimbursement of SCGT on service parts.Research & DevelopmentX Assistance of up to 50% of the project cost subject to max Rs. 10 Cr.X Additional FSI of 0.5 to R&D unitsX Need-based support to R&D units including testing facilities and incubation centers.
Marketing Assistance X Viability gap support to Industry Organisations for seminars subject to a ceiling of Rs. 10 Lakh (National) & Rs. 25 Lakh (International). X Assistance to MSMEs to promote products at 50% of total rent, etc subject to a maximum of Rs. 3 Lakh internationally.
Ease of Doing BusinessX Exemption from maintaining physical employment records, and obtaining consent certification from MPCB under certain conditions.

MIDC Defence Venture Fund

MIDC, in collaboration with IDBI, has set up an A&D investments, convertible instruments, and debentures are venture fund to provide financial support to startups some of the investment instruments through which the to promote sustainable enterprises in the defence, fund achieves risk adjusted returns. Recently in December aerospace and allied sectors in Maharashtra. The Fund 2022, MIDC approved contribution of Rs 30 crore as invests in companies which supply goods or services equity to the Centre of Excellence (COE) for aerospace to defence, aerospace or which manufacture or supply and defence at Nagpur. The COE is a new PSU and a joint components for the defence/aerospace industry or are venture of Vidarbha Defence Industries Association strategically important for India. Equity or equity linked (VDIA) and Yantra India Limited (YIL).


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