In the Uttar Pradesh (UP) Investors’ Summit held in February 2018, the Government of India announced the development of Defence Industrial Corridor (DIC) in the Bundelkhand region of UP with an investment of Rs. 20,000 crores. It is estimated that the construction of this corridor will generate more than one lakh employment opportunities. The proposed corridor will have six nodes, namely – Aligarh, Agra, Jhansi, Chitrakoot, Kanpur and Lucknow. About 3000 hectares of land in Bundelkhand area will be notified by the state government for the proposed corridor.
The corridor is in a special advantage due to its proximity to the Delhi-Mumbai Industrial Corridor (DMIC) and the ACIC. In addition, the corridor will have the benefit of connectivity with the Agra-Lucknow Expressway and the proposed Purvanchal and Bundelkhand Expressway.
Uttar Pradesh Defence and Aerospace Unit and Employment Promotion Policy-2018 has been amended, from 5 December 2018, with the objective that this amendment along with promotion/improvement and development of the region as well as mobiliser of available resources, will also provide employment opportunities in Uttar Pradesh.
The government of UP is offering attractive incentives and subsidies to investors to aid them in setting up of their manufacturing units in the state. KPMG (D&A) Team is the official consulting agency to UPEIDA, the nodal agency for the UPDIC.
Strategic Connectivity
Strategically located on the Golden Quadrilateral, UP is connected to major national and international airports in the country. The state has the largest railway network in the country spanning 8,949 km. Western Dedicated Freight Corridor (WDFC) is being developed from Dadri in Ghaziabad to Jawaharlal Nehru Port of Mumbai.
Likewise, Eastern Dedicated Freight Corridor (EDFC). The 57% covered area of the project is in Uttar Pradesh, which connects the eastern region with the western region. Since the junction of these freight corridors is located in Dadri, Ghaziabad, UP is in a very advantageous position in the logistics and warehousing sector.
A large part of the area covered by the Delhi-Mumbai Industrial Corridor (DMIC) and Amritsar-Kolkata Industrial Corridor (AKIC) is being developed parallel to the EDFC and WDFC.
The existing logistics infrastructure facilities in Uttar Pradesh include the joint domestic Rail and Exim (import-export) terminal at Moradabad, the rail-connected private freight terminal at Kanpur and the non-commercial container depot-IDC. Also , an ICD is located at Kanpur and at Dadri terminal. Apart from this, three multi-nodal logistics / transport hubs are also proposed in the state in Noida, Bodaki and Varanasi. Apart from the special investment centres like Kanpur, Noida, Varanasi and Ghaziabad, new investment areas like Dadri-Noida-Ghaziabad Special Area, Meerut-Muzaffarnagar Special Area, Deendayal Upadhyay Nagar (Mughalsarai) -Varanasi-Mirzapur are also being developed.
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In the connectivity network of UP, expressways like Purvanchal Expressway, Bundelkhand Expressway, Lucknow-Agra Expressway, etc, have been developed or are under development. Four lane and six lane National Highways, National Waterway-1 (NW-1, connecting international airport, Allahabad, Varanasi and Haldia Ports, are available. UP Govt will create such an air, water and rail connectivity facilities network, which will help industries and manufacturers of the state to transport their products.
Incentives for Units Investing
Incentives will be provided by the State Government only on purchase of land in the notified area for Defence Corridor in Uttar Pradesh. Such notification will be issued by the Government of Uttar Pradesh from time to time.
Anchor Defence/Aerospace Units, as defined earlier in the policy, will be given a rebate of 25% of the gross selling price of the land in the Defence Corridor.
Anchor units will be allowed to install vendor units in 20% of their land area.
Payment Terms for Land Allotment
The above facilities will be provided by the Uttar Pradesh Expressways Industrial Development Authority (UPEIDA) as per the provisions of the Uttar Pradesh Industrial Development Act, 1976.
Capital Subsidy. In the case of new anchor units in defence/ aerospace sector, back ended capital subsidy to the extent of Rs. 10 crore at the rate of 10% and to new vendor/MSME units at the rate of 5% up to Rs. 5 crore. Capital subsidy will be allowed (calculation of Subsidy will be based on fixed assets less land cost.
Subsidy will be given on start of production. Defence/aerospace units being establish in Bundelkhand Region will attract 15% or Rs. 15 crores, whichever is less, and to vendor/ MSME. Units, 7.50% or Rs. 7.50 crores post-capital subsidy, whichever is less will be applicable.
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Support to Common Facility Centre. The Common Facility Centre will assist in the additional effort of the eco-system of defence/ aerospace manufacturing in the state, and the State Government will provide a promotional incentive exemption for the establishment of a Common Facility Centre at each node in the form of land which is pre-identified in each node’s area. There is also a provision of soft loan for the establishment of CFC. The Common Facility Centre will be a collective collaborative effort in which MSME, defence/ aerospace sectors will participate. For the establishment of Common Facility Centre, the State Government will give 25% grant if 75% grant is given by the Government of India.
Rebates on Transport Charges
Transport of Plant and Machinery. Anchor defence and aerospace Units are eligible 50% Subsidy on Cost of transportation of imported equipment and Plant and Machinery from Logistics Park/Transport Hub/Harbor/Port to the Production Site located in the State, the consolidated maximum limit will be Rs. 2.00 crore. This subsidy will be applicable on the transportation of equipment by Defence and aerospace units for those projects whose contract value is Rs. 50 crore or more, the subsidy will be provided on commencement of production for the first year.
Transportation of Finished products. Defence and aerospace units to transport the finished products to the Logistics Park/ Transport Hub, Harbor/Port are eligible for 30% of transportation cost with effect from the first year of Commercial Production and up to next 05 years. Yearly limit of this subsidy will be Rs. 1.00 core.
Subsidy for the installation of effluent treatment plant. 20 per cent of the cost of the effluent treatment plant set up by the anchor Defence and aerospace units will be reimbursed to a maximum limit of Rs. 1.00 crore.
Technology Transfer Grid. Anchor units will be reimbursed 75% of the cost of transfer of technology to the first 5 vendors to the extent of maximum Rs. 50 lakh for each vendor unit located in the same cluster and 50% to the next 5 vendors thereafter.
Assistance for Research and Development and Testing Facility
Floor space of 2 KA index will be available to the eligible research and development units in the urban area, whereas floor space index will not be application in rural areas.
Promotion of innovation and research and development – Uttar Pradesh government will use the startup fund created under the UP Start-up Policy 2017 to promote innovation in defence and aerospace manufacturing. In this context, the state government will also partner with reputed innovation and research and development centres like IIT-Kanpur, IIT-BHU etc. The Government of Uttar Pradesh will align its R&D and innovation efforts with the IDEX and other such initiatives of the Government of India.
Capacity Development
Existing Skill Training Base and Strengthening. Where feasible, Uttar Pradesh Government will periodically start specially designed syllabus for Defence and aerospace sector after deliberations with government ITIs and polytechnics.
Educational Agreements. Uttar Pradesh government will encourage universities (in India and abroad) with excellence in Defence and aerospace training and research to enter into educational agreements with the universities of the state.
Subsidy for skill development. For every defence unit, Government of Uttar Pradesh will bear the cost of skilling (On the job Training) for 20 (Twenty only) persons to the limit of Rs. 10,000/- (Ten thousand only) per month, per person, for a period of 1 year.
Patent Cost / Quality Certification
The Government of Uttar Pradesh will provide financial assistance for expenditure incurred for obtaining patent registration and quality certificate.
Patent Fee Reimbursement. Defence and Aerospace units established in the country will be reimbursed 100% of the patent fee for domestic payment registration and 50% of the patent fee for international patent registration, the maximum limit of which is up to Rs. 25 lakh per unit. The annual maximum limit of reimbursement payable to all units will be Rs. 1 crore. This reimbursement is applicable only on receipt of the Patent.
Quality Certification. The Government of Uttar Pradesh will provide financial assistance to the MSME units de.ned in this policy for obtaining quality certification such as the AS 9100 series, NADCP. 100% of the certification fee for each certificate, a maximum of Rs. 01 lakh per unit will be reimbursed, the maximum limit of reimbursement payable to all units will be Rs. 20 lakh per year.
Trademark Registration. Trademark Registration application fees will be fully reimbursed to all eligible Defence and aerospace manufacturing units, a maximum of Rs. 01 lakh per year, per unit will be reimbursed, the cumulative limit of reimbursement payable to all units will be Rs. 10 lakh per year.
Ease of Doing Business
Taking forward the vision and goals of the State’s Industrial Investment and Employment Promotion Policy–2017, this policy also ensures ease of doing business in the state.
Single Window. All desired approvals and clearances to the Defence and aerospace manufacturing units will be provided by the state government through the single window system under the supervision of the Chief Minister’s Office.
Consolidated Payment of Incentives. Uttar Pradesh Expressways Industrial Development Authority (UPEIDA) will be the nodal agency for the facilities / incentives provided under this policy.
Simplification of Procedures. The objective of this policy is to rationalize the existing regulatory system and simplify procedures through self-certification, deemed approval; and third party certification.
Labour Permissions. The Government of Uttar Pradesh will allow the Defence and aerospace industry to provide flexible employment conditions, hours of work and 3-shift (women) and recruitment of workers on contractual basis under the relevant laws.
Infrastructure Facilities. Infrastructure facilities like 132 KVA. Level power supply system, Provision of Water Supply, Road connectivity and land demarcation by pillars shall be provided in each node.
Industrial Security. Uttar Pradesh Government will provide safe and fear-free industrial environment in the state. For this, dedicated police force will be deployed in the industrial cluster/area under the special of.cer and integrated police-cum-.re stations will also be established.
The procedure for acceptance of the facilities/exemptions provided in this policy will be the same as given in the Uttar Pradesh Industrial Investment and Employment Promotion Policy-2017.
100% exemption in stamp duty payable on purchase of land will be allowed to eligible units covered under this policy. Apart from this, no facility / exemption as provided in any other policy of the State Government will be permissible.
