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The biggest attraction will be offering reimbursement up to 25% of the cost of land to units investing over Rs 300 crore

NEW DELHI: Uttar Pradesh is rolling out the red carpet for companies wishing to set up big defence and aerospace units in the ‘Defence Industrial Corridor’ in the state, which was recently announced by Prime Minister Narendra Modi, by way of reimbursing 25% cost of land for the project and host of other benefits.

UP is notifying nearly 3,000 hectare of land between six nodes in the Bundelkhand region after PM announced the Rs 20,000 crore worth of defence corridor at the Investors Summit in Lucknow this February. A draft policy of UP, which was reviewed by ET and is expected to be notified soon, goes beyond existing concessions for new industries notified just last year and hence goes the extra mile to woo companies wishing to set up manufacturing and production units in the proposed defence corridor passing through Aligarh, Agra, Jhansi, Chitrakoot, Kanpur and Lucknow.

The biggest attraction will be offering reimbursement up to 25% of the cost of land to units investing over Rs 300 crore or creating at least 1,000 direct job opportunities in notified area of the defence corridor.

“We are ready to do anything to attract industry to UP. Nothing was thought on this by earlier governments. The defence and aerospace manufacturing policy of UP for the defence industrial corridor will perhaps be the most attractive in the country. Land is most expensive part of any project and we are for the first time planning to offer a major concession on land in the defence corridor announced by PM,” UP Industrial Development Minister Satish Mahana told ET.

This 25% reimbursement will also be applicable to ‘anchor units’ — which will be global or Indian original equipment manufacturer companies which design and manufacture defence and aerospace platforms with investments of over Rs 200 crore and bring along at least 10 vendor units. Vendor units are to be located in the same cluster as anchor unit and supply at least 75% of its end product to an anchor unit. Smaller units with lesser investment will get 10-15% discount on land cost. “Large parcels of affordable land are available in the Bundelkhand region,” the draft policy says, with an aim to mobilise private investments and develop export oriented manufacturing bases.

Defence PSUs who are interested will be given land on lease basis at subsidized rates, the draft policy says.

These incentives will be in addition to the various subsidies to be extended in form of concessional interest (reimbursed to the tune of 5%) on loans taken by these companies for capital, infrastructure and industrial research, besides full stamp duty exemption and 70%-90% state GST reimbursement under the already operational UP Industrial Investment and Employment Promotion Policy of 2017. There will be a 50% reimbursement of cost of transporting imported equipment or machinery from ports or harbours to the production site in UP and for finished goods vice-versa during initial years.

The state is also proposing three private ‘defence parks’ at Kanpur, Agra and Jhansi and three ‘aerospace parks’ at Lucknow, Agra and Kanpur of 100-150 acre each on the corridor. For these parks, UP will give ‘plug-and-play’ industrial infrastructure like manufacturing areas and testing centres and other concessions like interest reimbursements (of 50-60%) on loans taken by units to buy land, infrastructure or building common facilities. Each park will have at least five units.

The corridor is a prestigious project being monitored by the Prime Minister’s Office, Union Defence Minister Nirmala Sitharaman and UP Chief Minister Yogi Adityanath. The UP government is wooing defence players saying the corridor is located on the ‘Golden Quadrilateral’ and alongside the catchment area of the Eastern Dedicated Freight Corridor and the upcoming Western Dedicated Freight Corridor.

The defence corridor is expected to create nearly 2.5 lakh jobs, according to the state government.