Karnataka clears new aero, defence policy, offers subsidies

17 Aug 2022 CW Team

The state cabinet last week cleared the Karnataka Aerospace and Defence Policy 2022-27, which aims at attracting investments worth Rs 450 billion by offering several incentives to companies that manufacture products in the sector.

State Law Minister J C Madhuswamy said that the aerospace policy envisions transforming Karnataka into a manufacturing hub. Encouraging exports will be among the key aspects of the policy.

The new policy wants to solidify Karnataka's position in the aerospace and defence sector. Already, 25 per cent of India's aircraft and spacecraft industry is here, 67 per cent of all aircraft and helicopter manufacturing for defence services is done here and the state contributes 65 per cent of the country's aerospace-related exports.

The sector is considered a special category and a five per cent additional subsidy will be offered. While the subsidy limit for micro-enterprises is 30 per cent in zone-1 (outside Bengaluru), it will be 35 per cent 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 per cent.

Apart from this, the units can also attract investment subsidy of around Rs 20-25 lakh provided that the total quantum of incentives does not exceed 50 per cent of the total value of fixed assets of the company.

Madhuswamy said that the government will identify 10 institutions to train youth in the sector. "Under the policy, 200 candidates will be offered a stipend of up to Rs 70,000 for training," he said, adding that the government also is considering providing training in the sector for school students.

In 2013, Karnataka was the first state to come up with an Aerospace and Defence Policy, which is valid up to January 31, 2023.

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