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
• Creating additional employment opportunities of more 70,000 and developing the state as a manufacturing hub including MRO and space applications for both Indian market and exports are some of the key features of A&D policy
• Another key thrust of the policy is to focus on setting up of Defence Testing Infrastructure (DTI). Lack of accessible testing infrastructure is the main impediment for the domestic A&D production units. The DTIs will be set up under the private sector with government assistance
• The policy said 25% of India’s aircraft and spacecraft industry is based in Karnataka;

Background:

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

Karnataka- a preferred destination for aerospace

• The State is comfortably positioned as an aerospace destination due to the activities of numerous aerospace companies and PSUs engaged in manufacturing, design and development, and Maintenance, Repair and Overhaul (MRO) activities in Bengaluru and other parts of the state.
• Karnataka offers the best ecosystem for aerospace and defence, 25% of India’s aircraft and spacecraft industry is based in Karnataka and more than 67% of all Aircraft and Helicopters manufacturing for defence services is done in Karnataka. The state contributes to 65% of the country’s aerospace related exports from India and have an aerospace focused special economic zone by Aequs in Belagavi, which has been in operation for over 10 years with more than 6500 employees working in the campus in various sectors of Aerospace, Defence and engineering products. OEMS like Boeing and Airbus are some of the marquee units within this SEZ, which also has units servicing the Indian Space Research Organization (ISRO).
• Karnataka is best suited for establishing Defence technology hubs given its strong ecosystem, R&D, IT and technical innovation culture, presence of leading DPSUs such as HAL, BEL and laboratories such as DARE and ADE of DRDO.

Measures taken by the government

• Karnataka is developing the second phase of Aerospace and Defence Park in Haralur with a total land area of 1,200 acres next to the Bengaluru International airport and in close proximity (10 kms) from existing Devanahalli Aerospace and Defence Park.
• The government has taken the initiative to encourage the development of more such spaces for the aerospace and defence sector with comprehensive infrastructure facilities including captive power generation, water supply, facilities for R&D/testing, common training & warehousing facilities, plug n play facilities, to name a few.
• Importantly the government has amended section 109 of Karnataka Land reforms Act, through which any industrial project approved by single window clearance committees will be allowed to procure land directly from the landowners Payments and loans are being processed through leading banks to facilitate lending of up to fifty percent of the land cost for investors.
• The Government of Karnataka has set a target to skill 18.8 million youth between 2017-2030. With a robust infrastructure to boost skills and qualifications, which include over 7000 training institutes, Karnataka is well positioned to achieve this target.
• The state shall constitute a vision group comprising representatives from leading Aerospace and Defence companies in the private sector, Defence PSUs, Academia. The government will formulate a detailed five-year skilling roadmap for the aerospace, defence sector, and develop curriculums for aerospace related courses in government and vocational training institutions.
• The State shall conduct Industry connect workshops and Skill gap studies around identified aerospace and defence clusters to understand the growing needs of skilled and semi-skilled manpower in this sector.
• The vocational and technical training courses shall be upgraded basis skilling gaps identified from the industry connect workshops and skill gap studies on the recommendations of the Aerospace & Defence Vision Group
• Private sector companies in the aerospace and defence sector shall be encouraged to adopt vocational training institutes whereby they can use the facility infrastructure to provide training in skills relevant to the sector
• The government shall encourage PSUs such as DRDO, BEL, and NAL to collaborate with academic institutes and impart skill training in the identified areas to boost such skills and will be encouraged to provide internships