India’s Gujarat State Offers Incentives for Defense Equipment Manufacture

Gujarat state of India has released an investor-friendly Aerospace and Defence Policy 2016 that offers incentives and tax sops in relation to land allotment, stamp duty, registration charges and electricity duty.

The state will now provide government land at 50% of jantri rates for setting up units during the five-year tenure of the policy to attract defence and aerospace sector players. Land owned by the state and Gujarat Industrial Development Corporation will be given first preference for land allotment.

"Those intending to establish their manufacturing units under the policy, will get land at 50% of the existing jantri rate." J N Singh, chief secretary, Gujarat, was quoted as saying by Times Of India today.

“Earlier, a committee was to be formed for deciding the rate for land allotment. However, the process was time consuming." Singh added.

"There will be 100% rebate on stamp duty and registration charges levied on land purchased and electricity duty waiver for a period of five years since the commencement of production," Singh confirmed.

He said that inter-tidal land of Gujarat Maritime Board (GMB) and state government will also be allotted to the units under this policy, which  gives special priority to cluster-based industries in defence and aerospace sector.

Apart from providing land at jantri rates for development of industrial clusters, a facility for trial and testing range will also be made available for defence industry.

As far as tax sops are concerned, the government has offered tax relief up to 90% of fixed capital investment. It could also go up to 100% considering financial constraints faced by any player.

The tax sops are for a period of 10 years. The policy also provides for cash as well as interest subsidy for aerospace and defence sector players wanting to establish their units in the state.

To make MSMEs an integral part of defence industry development in the state, the government has offered cash subsidy up to Rs 2.50 crore (US$367 thousand) only for Micro, Small and Medium Enterprise (MSME) units.