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Maharashtra eyes $2 billion investment to create defence industry hubs near military bases

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The defence hubs have been planned in Nagpur, Pune, Aurangabad, Ahmednagar and Nashik — all cities having significant army cantonment areas.

Mumbai: The BJP-led Maharashtra government has unveiled a policy to attract investments of $2 billion with a unique model to create five defence manufacturing hubs near military bases in the state.

The policy was among the six new sector-specific industrial investment policies the state cabinet approved Tuesday, about a fortnight before its first grand investment summit branded as ‘Magnetic Maharashtra’ begins.

The defence and aerospace manufacturing hubs have been planned in Nagpur, Pune, Aurangabad, Ahmednagar and Nashik — all cities having significant cantonment areas — to generate demand.

Nagpur also has a maintenance, repair and overhaul facility that the policy hopes to leverage and develop as a global hub for air traffic.

The policy, under which the state hopes to attract an investment of $2 billion and create one lakh jobs in five years, will be applicable for 20 years, an official from the industries department told ThePrint.

“Today’s policy is to encourage anchor units that play a very important role in industrial clusters,” the state government said in a statement.

“The policy will also help develop markets for small and medium defence enterprises, work along with public sector defence undertakings to aid investments in the state…” it added.

The global defence industry is growing by 3-4 per cent and the Indian market is growing by over 10 per cent. The Union government currently relies on imports for 70 per cent of its defence needs and it wants to cut this by 30 per cent, which will encourage domestic production.

Moreover, raising the FDI cap to 49 per cent from the current 26 per cent in this sector will also create opportunities for states.

One of the highlights of the policy will be a Rs 1,000 crore corpus fund that the state government will create and maintain through the Maharashtra Industrial Development Corporation (MIDC) to provide viability gap funding for micro, small and medium enterprises.

“We want to ensure that these smaller firms do not have any crunch of fixed and working capital,” the official said.

Under this policy, the state government has classified mega projects as those with a minimum fixed capital investment of Rs 250 crore and employing 500 people in the more developed A and B category industrial areas.

For other industrial areas, the state will classify mega projects as those with a fixed capital investment of a minimum of Rs 100 crore and employing 250 people.

Besides the defence and aerospace policy, the government also approved a policy for electric cars, under which it plans to incentivise not just producers of electric cars, its parts, batteries and charging stations, but also end-users of the first one lakh such private vehicles registered in the state.

Other policies that the government rolled out include one for logistics parks, clusters for readymade garments, gems and jewellery and small electronics manufactures among others.

It also introduced an investment policy for financial technology companies setting an objective of creating 300 start-ups in three years.

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