Industrial corridor : Yogi government rolls out sops for defence manufacturing in Uttar Pradesh

As part of its ambitious plan to set up defence production in the state, Uttar Pradesh government is offering discounts for defence production players to set up units in Uttar Pradesh, reported Economic Times.

A Rs. 20000 crore ‘Defence Industrial Corridor’ was announced in the state by the Modi government at the two-day Defence Investors Summit organized by UP government in February this year. Earlier, in his budget speech, Finance Minister Arun Jaitley had said that two industrial corridors will be set up in the country. One between Chennai and Bengaluru passing through Coimbatore and the second one in Bundelkhand region of UP which is nearly 3000 hectares in area passing through Aligarh, Agra, Jhansi, Chitrakoot, Kanpur and Lucknow. Defence Minister Nirmala Sitharaman had also laid emphasis on putting a curb on foreign defence purchases and to encourage domestic production.

According to the ET report, which is based on a draft policy, among a host of other benefits, the government is offering reimbursement up to 25% of the cost of land to units which invest over Rs 300 crore or which create at least 1,000 direct job opportunities in the notified area of the corridor. This 25% reimbursement will also be applicable to ‘anchor units’. The units, Indian or global, original equipment manufacturer (OEM) companies which design and manufacture defence and aerospace platforms with investments of over Rs 200 crore and bring at least 10 vendor units are defined as ‘anchor units’.

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Vendor units should be located in the same cluster as ‘anchor units’ and should supply at least 75% of its end product to any ‘anchor units’. Small units with lesser investment will get 10-15% discount on the land cost. The policy aims to attract private investment in the state in the area of defence production.

Interested Public Sector Units might be offered land on subsidized lease rates. The state will provide incentives and subsidies to private sector companies with respect to land, Research & Development, testing unit, capital expenditure, infrastructure etc, full stamp duty exemption and 70%-90% state G.S.T reimbursement under the existing UP Industrial Investment and Employment Promotion Policy of 2017. There will be a 50% reimbursement of the cost of transporting imported equipment or machinery from ports or harbours to the production site in UP and for finished goods vice-versa during initial years.

The Modi government will also make an investment of Rs 30 billion for creating the necessary infrastructure to help private sector set up their units in quick time and develop a partnership with Indian companies for joint production with the terms of technology transfer. Indian Institute of Technology – Kanpur (IIT-K) and Banaras Hindu University (BHU) has been engaged as knowledge partners.

The Defence corridor is an ambitious part of Modi government’s Make In India project. It is also expected to create about 2.5 lakh jobs.

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