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The State Cabinet approved the Karnataka Aerospace and Defence Policy 2022-27 to attract investment of ₹45,000 crore in the next five-year period and extend concessions for investors in the sector.

Earlier, the government formulated Aerospace and Defence Policy in 2013.

Aim of the policy

• Attracting more investments and to establish Karnataka as the preferred investment destination for Aerospace and Defence manufacturing
• Promote development of indigenous and advanced technologies.
• Promoting development of manufacturing facility for space-related applications, developing world class-skilled manpower.

Highlights:

• It envisages support for MSMEs in the supply chain with increased technological access to be globally competitive in the sector.
• The policy extended zonal-wise concessions for investors in the sector.
• In Bengaluru Zone, it says that the total incentives sanctioned to a unit should not exceed 40% of value of fixed assets (VFA) and and outside Bengaluru, it should not exceed 50% of VFA for a unit.
• As per the new policy, 5 per cent additional subsidy will be given to encourage entrepreneurs and it may go up to Rs 35 lakh per entrepreneur to investment in the five aerospace and defence hubs in Bengaluru, Belagavi, Mysuru, Tumakuru, and Chamarajanagar.
• While the subsidy limit for micro-enterprises is 30% in Zone-1 (outside Bengaluru), it will be 35% for micro-enterprises in the special category. For Zone-2 and Zone-3 (in Bengaluru), subsidy for micro units manufacturing aerospace and defence products will be 30%
• Youth will be provided training for skill development in the aerospace and defence sector. 200 candidates will be given training in 10 institutes, And, during the training, candidates will be given a stipend of up to ₹70,000. “There is also a plan to train students at the school level
• The policy said 25% of India’s aircraft and spacecraft industry is based in Karnataka; and 67% of all aircraft and helicopters manufacturing for defence services is done in the State. Karnataka contributed to 65% of the country’s aerospace related exports from India.

Background:

• Chief Minister Basavaraj Bommai had announced the proposal on Karnataka Aerospace and Defence Policy 2022-27 in the State Budget for 2022-23.