Aerospace and Defense Policy 2016

Vision

To "establish Gujarat as a hub for indigenous aerospace & defence manufacturing, develop globally competitive talent in the sector, promote investment in R&D to drive globaly recognized innovation in product design and manufacturing and support enabling institutions in the A&D manufacturing ecosystem".

Government of India's priority is to indigenize the Aerospace & Defence (A&D) industry, attract global players to manufacture in India, and lower the dependence on imports in the sector. A&D is amongst the identified sectors under the prestigious Make in India program. The Industrial Policy 2015 of the Government of Gujarat envisages a focused approach on Make in India program as the state's strategy for achieving growth.

Policy Operative Period:- 2016 to 2025

Objectives
  • Attract 10% by value of orders of the defence sector in India over the next 10 years.
  • Attract five mega A&D enterprises to the state in the next 5 years.
  • Create 20,000 direct/indirect jobs in the A&D sector over the next 10 years
Definitions
  1. Mega A&D Enterprise Is a global/Indian Original Equipment Manufacturer (OEM), i.e. a company which designs and manufactures the A&D platform and makes investment of Rs. 500 Crore or above in the project; and has on hand A&D orders of Rs. 50 Crore or above at the time of commencement of production. For this purpose, the definition of an A&D order is a contract with the Ministry of Defence or the Ministry of Home Affairs in Government of India or their equivalent in a foreign country.
  2. Large A&D Enterprise A Large A&D Enterprise is one that makes investment lower than the minimum investment prescribed for a Mega A&D Enterprise under this scheme but above that prescribed for a medium enterprise under the MSME Development Act, 2006 of Government of India.
  3. A&D Micro, Small and Medium Enterprises (MSME) A micro, small or medium enterprise shall be one which satisfies the conditions of Micro, Small and Medium Enterprises under the MSME Development Act, 2006 of Government of India, and has acknowledgement of Entrepreneurs' Memorandum or Udyog Aadhaar (UA) filed with the competent authority.
Policy Features:

Incentives

Land Related Incentives:

A&D enterprises usually duster around a central mega/ large A&D enterprise, Mega/Large A&D enterprises, with investment of over Rs.200 Crore and having potential for cluster formation, would be given preference in allotment of government land or land in GIDC estates. Government land would be provided at 50% of Jantri rate wherever such land is available. 100% reimbursement of stamp duty and registration charges paid for on purchase of land.

Capital Investment Cash Subsidy to A&D MSME</h5
Category of unit

Rate of Cash Subsidy

Ceiling
Micro Unit 25% of eligible fixed capital Investment Rs. 72.5 Lakh one time during the Operative period of the Scheme
Small Unit 25 % of eligible fixed capital

Investment Rs. 1.25 Crore one time during the Operative Period of the Scheme

Medium Unit 25 % of eligible fixed capital

Investment Rs.2.5 Crore one time during the Operative Period of the Scheme

Interest Subsidy
No

Type of Enterprise 

Interest Subsidy Duration
1 Mega A&D ECB (External Commercial Borrowing) - maximum of 2% or 50% of the interest rate at which the loan is availed per annum whichever is lower. Domestic borrowing - 5% or 50 % of the rate of interest at which the loan is availed per annum whichever is lower, the total interest subsidy amount on ECB plus Domestic borrowing shall be maximum Rs.10 Crore per annum 5 Years
2 Large A&D ECB - maximum of 2 % or 50 % of the interest rate at which the loan is availed per annum whichever is lower. Domestic borrowing - 5 % or 50 % of rate of interest at which the loan is availed, per annum whichever is lower. The total interest subsidy amount on ECB plus Domestic borrowing shall be maximum Rs. 5 Crore per annum 5 Years
3 MSME ECB - maximum of 2 % or 50 % of the interest rate at which the loan is availed per annum whichever is lower, Domestic borrowing - 7 % or 50 % of rate of interest at which the loan is availed per annum whichever is lower. The total interest subsidy amount on ECB plus domestic borrowing shall be maximum Rs. 1 Crore per annum 5 Years
  • Reimbursement of Value Added Tax (VAT) and Central Sales Tax (CST/Net SGST) (till the introduction of Goods & Service Tax Act in the country) - An A&D enterprise would be allowed reimbursement of net VAT and CST/ Net SGST for 10 years to the extent of 90% of the eligible Fixed Capital Investment made by it in the project.
  • Incentive in Power Tariff and Electricity Duty - An A&D enterprise shall be given 100% exemption on Electricity Duty for the first 5 years from the date of commencement of commercial production. An A&D enterprise that purchases power from a state owned Distribution company shall be given subsidy on Power Tariff of Re. 1 per unit in the billed amount for a period of 5 years from the date of commencement of production.
  • Assistance for Skill Development - Various training assistance is provided for A&D manufacturers to train their employees.
  • Assistance for R&D Centers - To encourage research and development in the A&D sector in the state, 50% capital subsidy, limited to 5 Crore, shall be provided to an A&D enterprise or organization in setting up a R&D Centre in the state.
  • Equity Support - The State Government may participate in the equity share capital of a Mega or Large A&D enterprise directly or through a State PSU. Such participation shall be decided by the government/CCCIPM as referred at para 7 of this resolution on a case-to-case basis and would depend on the merits of each case.
  • Other supports like Centres of Excellence, Establishment of Universities, Skill Development Council, Single Window Facilitation cell for marketing, etc. will also be provided.
Sanctioning Authorities

There are category wise different sanctioning authorities like Mega A&D Enterprises chaired by Chief Secretary, Large A&D Enterprises chaired by Additional Chief Secretary, MSMEs chaired by Industries Commissioner.

For more information please visit: https://ifp.gujarat.gov.in
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