MAHARASTRA:
AEROSPACE & DEFENCE SECTOR
Reaching the skies with Aerospace and Defence manufacturing
Maharashtra has a thriving Defence & Aerospace industrial manufacturing ecosystem and has recently facilitated cluster-wise development led by one or more anchor units.
The Government of Maharashtra has prioritized developing and promoting Maharashtra as the Aerospace & Defence manufacturing and export hub for which it released the Aerospace & Defence Manufacturing Policy, 2018. Maharashtra already has over 42% of India’s efforts in Aircraft, Spacecrafts and Parts, Ships, Boats, and Floating Structures.
As the policy especially focuses on developing MSMEs to be the supplier base to anchor units, the Government of Maharashtra now aims to create a corpus of INR 1000 crore to provide initial capital to these MSMEs.
The state has already prepared multiple defense manufacturing hubs in Pune, Nagpur, Ahmednagar, Nashik, and Aurangabad, thus contributing substantially to the Centre’s reduction of India’s dependence on defense and aerospace imports. Nashik is the biggest defense manufacturing hub with Hindustan Aeronautics Limited (HAL), and Nagpur is currently being promoted for the MRO facilities it offers.
Maharashtra: The Lighthouse of India’s industrial dream
Maharashtra is the economic and industrial powerhouse of India and is the largest economy in the country. The state’s GSDP is more than USD 400 billion, accounting for almost 15% of the country’s GDP. With a contribution of over 15% to the country's country's industrial output, the state records the highest value of exports, accounting for 21% of India’s total exports during 2019- 20.
In fact, Maharashtra was ranked 2nd on NITI Aayog’s Export Preparedness Index, 2020.
The state has been a preferred investment destination for foreign investors since the 1991 reforms and has attracted more than USD 140 billion in FDI from 2000 – 2020, accounting for 30% of India’s share.
Maharashtra also has the largest pool of trained workforce in the country and the highest employable rate in India.
WHAT IS IT THAT MAKES MAHARASHTRA ONE OF THE MOST PREFERRED INVESTMENT DESTINATIONS IN THE COUNTRY?
The state has been known for its dynamic leadership, efficient administration, vibrant infrastructure, progressive society, and consistency in policies. The Government of Maharashtra has consistently provided a strong policy framework comprising demand and supply-led incentives and subsidies to support and facilitate infrastructure and investment-led growth.
In addition, the state offers the highest employable talent due to its constant focus on training, capacity building, and upskilling of its workforce.
Acknowledging the development of infrastructure and logistics, the Government of Maharashtra has displayed high priority towards the development of Transport and allied services. Over 30 + mega projects are currently under development, and USD 40 billion is already allocated in developing transport infrastructure around key manufacturing and industrial zones. This has attracted investors across the state and is helping develop logistics equitably.
CRITICAL ROLE IN BRINGING INVESTMENTS AND ENSURING INFRASTRUCTURE DEVELOPMENT IN THE STATE IS PLAYED BY THE MAHARASHTRA INDUSTRIAL DEVELOPMENTAL CORPORATION (MIDC)
Which is the Government of Maharashtra’s nodal investment promotion agency?
The corporation is not only the country’s largest industrial development authority but one of South East Asia’s most competent Investment Promotion Authority. It provides a single point of contact for all investor relations and manages 289 industrial parks built over 2.25 lac acres of land across the state.
Since its inception, MIDC has enabled the state to achieve an undisputed leadership position in investments and industries.
Currently, MIDC administers the investment lifecycle in the state from outreach to aftercare and is responsible for providing essential infrastructure to businesses like land, power, water, and more. MIDC as an investment promotion agency is strongly supported by the state government’s pro-industry policies and incentive schemes.
THESE commitments UNDERPIN THE FACT THAT MAHARASHTRA CONTINUES to be the powerhouse of industrial development in India. The state’s capacity to harness an industrial ecosystem coupled with visionary leaders and policymakers that successfully deploy resources strategicallyaharashtra a business destination like no other. Maharashtra has been growing rapidly and is on a path to becoming the nation’s first trillion-dollar economy.
Aerospace & Defence Manufacturing Policy -2018
The policy seeks to establish Maharashtra as the preferred investment destination for domestic Defence & Aerospace manufacturing, promote indigenous and modernized technological capabilities, develop a world-class skilled workforce, and support MSMEs to be globally competitive in the Aerospace & Defence sector.
The State expects to attract investment worth USD 2 billion in the Aerospace & Defence sector in the next five years, thereby creating nearly 1 lakh employment opportunities. With Nagpur as its hub, this policy seeks to promote Maharashtra as a global MRO hub.
Fiscal Incentives
1. Mega Projects
A. Aerospace and Defence units in A and B category areas with minimum Fixed Capital Investment (FCI) equal to Rs 250 crores or minimum employment of 500 people and units in rest of the state with minimum FCI of Rs 100 crores or employing 250 people will be accorded Mega Project status. The quantum of incentives of Megaprojects shall be customized.
B. Expenditure on test range up to a ceiling of 20% of total project cost of Rs 100 Crores, whichever is lower, will be considered a part of admission fixed capital investment incentives. Further, given the unique requirement of the defense sector, investment in Test Range & Storage facilities in separate locations shall be Permission.
C. The incentive period will be allowed to be commenced upon acceptance of the products by the Ministry of Defence, Government of India
D. Investment in Research and Development (R & R&D) up to 10% of the project cost will be incentivized (limit RR & s 50 Crores).
E. Eligible Aerospace aincentivizedimbursed stamp duty paid during the investment period for acquiring land and term loan purposes.
F. Mega Projects in MIDC area obtaining Building Completion Certificate (BCC) with the commencement of commercial production within admissible development period, shall be eligible for concession in water charges, service charges, and fire cess as under, Building Completion Certificate (BCC) Concession
Minimum 50 % and less than 75% 100% waiver from payment of service charges and fire cess + 20% concession in water charges
Minimum 75% and less than 100% 100% waiver from payment of service charges and fire cess + 30% concession in water charges
100% waiver from payment of service charges and fire cess + 40% concession in water charges
NOTE: This concession will be provided for the balance development period.
2. Anchor Units
Government of Maharashtra
A. A unit will qualify as an Anchor Unit provided it is a Mega Unit and has a confirmed order book of USD 100 million from MoD or such bodies. Anchor units will be offered land at 75% of the prevailing land rates within the MIDC Industrial Area falling in A & B category locations and at 50% of the prevailing land rates at other locations with a maximum of 100 acres.
3. Promotion of Common Facilities
A. MIDC will, on a case-to-case basis where minimum investment through FDI is Rs 100 Crores, assist in setting up Common Facility Centres for the Aerospace and Defence Industry. MIDC by way of equity in the form of land and financial assistance to the extent of 15% of the project cost subject to a maximum of Rs 15 Crore.
B. If 20 or more Micro, Small, and Medium industrial units from an SPV for Defence and Aerospace Manufacturing, then State Government will sanction Rs 15 Crores as State Government’s share in Central Government’s Micro Small Enterprises (Cluster Development Programme (MSE-CDP).
Aerospace &Defence Sector Overview in India and Maharashtra
3rd
India has the 3rd largest domestic aviation market in the world.
2nd
India has been the 2nd largest arms importer globally in the last 5 years after Saudi Arabia.
11.3%
CAGR of growth in passenger air traffic during 2016-2020
100%
India has allowed 100% FDI via automatic route in the Aviation sector...
74%
FDI allowed through automatic route in defense manufacturing
1st
State in the Country to launch a Defence and Aerospace Policy with incentives
12%
Defense sector GVA growth in 2018- 2019
24%
Manufacturing growth in Other Transportation equipment including aircrafts
1MnMT
Cargo Traffic Handled by Airports in the State in 2018-2019
3
Major International Airports including Mumbai, which is 2nd biggest airport in India.
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