Tamil Nadu wants to attract USD 10 bn investment in aerospace, defence sector

Chennai: In order to promote itself as a preferred hub for Aerospace and Defence industries, Tamil Nadu wants to attract investment to the tune of $5 billion in next five years and double it to $10 billion in the next 10 years. This will help the state generate an employment of one lakh in next 10 years, as per the policy document released at the Global Investors Meet. In order to attract investments, the state government is offering huge incentives for enterprises intending to set up facilities in the state. 

The state government will facilitate development of aerospace and defence clusters in Chennai, Coimbatore, Kancheepuram, Krishnagiri, Salem and Trichy districts under public-private partnership. It will provide special incentive package of assistance for clusters and equity participation for developing aerospace and defence parks. It will improve rail/road/air connectivity to the parks and take special initiatives to attract global and national OEMs and tier I manufacturers. The government will provide special funding in the form of equity in joint venture with Tamil Nadu Industrial Development Corporation for projects involving manufacturing and assembling of civil/military aircrafts, main battle tanks and other aerospace and defence platforms and equipments. Such projects by private entities involving design, development, manufacturing, testing and certification will be considered as special initiatives.

In order to provide human resource, the government will partner with global and Indian OEMs and institutions under PPP mode to establish new and upgrade existing skill development institutes, colleges and universities in the state. New and existing manufacturing units in Tamil Nadu which are undertaking projects under the offset obligations requirements of the Ministry of Defence will get 30 per cent concession on the land cost and 100 per cent reimbursement on stamp duty on lease or sale in industrial parks or aerospace and defence parks promoted by SIPCOT and TIDCO.

The government will also provide a subsidy of Rs one crore or 25 per cent of the capital cost for setting up dedicated effluent treatment plants and Hazardous Waste Treatment Storage and Disposal Facility. Further, a structured package of incentives for projects with investment above Rs 300 crore will be provided for new and expanding manufacturing units on a case to case basis. Moreover, a slew of incentives in the form of subsidies will be offered for the manufacturing units. This includes anchor investment subsidy of 10 per cent on the eligible fixed assets for the first 10 aerospace/defence OEMS and tier I enterprises and their suppliers, 100 per cent subsidy on the cost for on-job training for one year to a maximum Rs 10,000 per month per trainee for maximum 50 trainees of a unit and 50 per cent reimbursement of the cost of certification subject to a ceiling of Rs 25 lakh.

The manufacturing units will receive 100 per cent exemption on electricity tax on power purchased from the government as well as generated and consumed from captive sources for the first 10 years. Expansion projects also will be eligible for this for 10 years.

Units allotted land in aerospace/defence parks or SIPCOT parks within three years of the announcement of the policy will get 20 per cent concession on actual land cost. Units with investment up to Rs 10 crore will be given a back ended capital subsidy of 10 per cent and those investing between Rs 10 crore and Rs 300 crore will be eligible for 5 per cent subsidy.

The quantum of incentives for parks investing Rs 300 crore will be decided on a case to case basis. An infrastructure back ended subsidy of 10 per cent on eligible fixed assets will be given to park developers investing a minimum of Rs 50 crore.  Aircraft maintenance, repair and overhauling facilities will get refund of 50 per cent of SGST.

Tamil Nadu is one among the two defence industrial production hubs announced by Centre, the other being Uttar Pradesh. The policy document was released by Defence minister Nirmala Sitharaman at the Global Investors Meet.

Tamil Nadu government a few days back had announced that it had already received investment proposals to the tune of Rs 3,100 crore from the ordinance factory boards (OFBs), Defence Public Sector Undertakings (DPSUs) and private sector units. Defence private sector players like Lockheed Martin and LMW had also expressed their intentions to invest in the state.