Uttarakhand: Incentives for Defence Production

Sub Title : The Aerospace and Defence policy greatly facilitates investment

Issues Details : Vol 15 Issue 2 May – Jun 2021

Author : Editoral Team

Page No. : 40

Category : Military Affairs

: July 1, 2021

Sh Tirath Singh Rawat, Chief Minister Uttarakhand – The Uttarakhand Government invites entrepreneurs to come in invest in the Aerospace and Defence Sector in the state. In addition to the ideal conditions obtaining in the State we also offer lucrative incentives to those who wish to establish business in or state. We will be very happy to have yo as a companion on the path of growth.

Uttarakhand Aerospace & Defence Industrial Policy was approved by the Uttarakhand cabinet in February 2020 to boost manufacturing in said sectors. The Policy has been enunciated with the aim of making Uttarakhand India’s preferred destination in the field. It  will encourage development  of indigenously designed and manufactured (IDDM) defence and aerospace equipment /subsystems /components and consumables in the state of Uttarakhand under the Government of India’s Make in India initiative, on an industrial basis and utilizing the state’s talented human capital.

The state will have dedicated industrial parks to attract investment in this sector and a slew of incentives will be given to those who undertake aerospace  and defence manufacturing in the state of Uttarakhand.

Uttarakhand has SIIDCUL the State Infrastructure and Industrial Development Corporation of Uttarakhand Limited which is a Government enterprise. SIIDCUL will facilitate projects being undertaken in Uttarakhand. It is committed towards ‘Ease of Doing Business’ by providing an investor-friendly & transparent mechanism which completely eliminates any physical touch point.

A fully automated land allotment process through single window clearance system and an application has been introduced to bring in speed and accountability to the land allotment and other processes. GIS has also been incorporated within the application providing plot status and availability as well as the provisions of infrastructure like road connectivity, water connection, electricity infrastructure and sewerage connection etc of all the industrial estates in an interactive representation, equipping investors with reliable information to take informed decisions.

To encourage entrepreneurs to come forward several incentives are being offered these are given in the succeeding paras.

One Time Incentives

Land Cost Rebate.

   Land Subsidy – 20% concession/reimbursement on SIIDCUL land cost (applicable for 3 years from the date of notification of this Policy) under Uttarakhand Aerospace and Defence Industrial Policy, 2020

   Offset Obligation Incentive – New /existing manufacturing units located in Uttarakhand undertaking projects which are subject to the requirements of the offset obligations of the Ministry of Defence, will as a special incentive get a 30 percent concession on the total cost of land allotted in Industrial Parks/Aerospace and Defence Parks as implemented by SIIDCUL. Discount / reimbursement will be provided. In this regard, SIIDCUL Board will take the decision.

Fixed Capital Rebate.

   Capital Subsidy – Under MSME Policy 2015

(As Amended in 2019) – for factory building,

plant & machinery.

Category A: 40% (Max up to INR 40 Lakh).

Category B, B+: 35% (Max up to INR 35 Lakh).

Category C: 30% (Max up to INR 30 Lakh).

Category D: 15% (Max up to INR 15 Lakh).

   Capital Subsidy for Aerospace & Defence Industrial Parks. 10% on the fixed assets (maximum of INR 10 crore) – Minimum area requirement:

50 acres. (development of Maintenance, Repair and Overhauling (MRO) complex is also covered).

Stamp Duty Exemption

   MSME Policy 2015 (As Amended in 2019)

◊ Category A, B, B+, C: 100% exemption.

◊ Category D: 50% exemption.

   Mega Industrial and Investment Policy 2015.

50% exemption on Stamp duty for Large, Mega,

Ultra Mega and Super Ultra Mega projects.

Other Incentives

   Anchor Unit Subsidy – 10% (max up to INR 10 crore) on the fixed assets, on investment of INR 100 crore or above with employment to 100 persons or more

(The proposed investment should be made within 3 years)- eligibility only for the first 5 Aerospace & Defence OEMs under Uttarakhand Aerospace & Defence Industrial Policy, 2020.

   Certification Process Subsidy – 50% (Max INR 25 Lakhs per unit) – OEMs under Uttarakhand Aerospace & Defence Industrial Policy, 2020.

   Special initiative – Manufacturing and assembling of civil /military aircraft, main battle tanks and other aerospace and defence platforms and equipment is an important initiative of the project, as they will help increase the dispersion and manufacturing capabilities of aerospace and defence industrial units in the state. Such projects of private industries with joint responsibilities of design development, manufacturing, testing and certification in the state will be considered for special initiatives. The government, in partnership with SIIDCUL, will approve special funding as equity of such joint ventures.

ETP Subsidy.

◊     Heavy Industrial Investment and Employment Promotion Policy 2018 -30% up to a maximum of INR 20 Lakhs.

◊     Mega Industrial and Investment Policy 2015 – 30% up to a maximum of INR 50 Lakhs.

Recurring Incentives

Skill Development/ Training Incentive. 50% (for maximum 20 trainees employed on rolls). Max INR 5000/- per trainee per month per unit for 1 year.

Electricity Duty Rebate. 100% (for the first 5 years from the date of start of commercial production). Expansion projects will be entitled to exemption for the additional electricity consumed for 5 years under Uttarakhand Aerospace & Defence Industrial Policy.


Uttarakhand is a preferred investment destination of many industrialists as it offers a quiet pollution free environment and has no law and order problems at all. Electricity and water are available aplenty. People are very peace loving, hence there will be no labour issues at all. Besides as stated SIDCUL will facilitate everything from single window clearances and appoint dedicated relationship managers. Uttarakhand is home to some of the biggest auto manufactures namely- Hero Moto Corp (World’s Biggest Two Wheeler Manufacturer), Tata Motors (World`s 2nd largest truck manufacturer), Bajaj Auto (World`s largest three wheeler manufacturer).Ashok Leyland (World’s 4th largest bus manufacturer) and Mahindra(World’s largest tractor player by volume).

Uttarakhand is also home to a Dedicated Drone Research and Development Centre at ITDA, Dehradun. In the field of electronics Dehradun has the OFB run Opto Electronics Factory and the DRDO’s Centre for Defence Electronics Application Laboratory. These are premium facilities being run by government agencies and can be of great help to a party establishing a facility related to electronics. In addition, an Electronic Manufacturing Cluster  is coming up in the Integrated Industrial Estate in Kashipur.

Uttarakhand is therefore a land full of opportunities for entrepreneurs and is looking forward to welcome those who come forward to establish defence manufacturing units in the State. We assure you of our unstinted support and cooperation.