Mumbai: The State government has decided to set up a special ‘offset’ fund of ₹1,000 crore to help defence equipment manufacturing firms scale production. The money will be borrowed from public sector banks. The decision was taken after Chief Minister Devendra Fadnavis’s visit to the United States of America, Israel and Russia last year to market the State as a defence equipment manufacturing hub. At the time, international manufacturers had expressed reservations about limitations of Indian firms when it came to tie-ups.
During Mr. Fadnavis’s visit, it was pointed out that leading foreign defence equipment makers were willing to shift as much as 30% of their manufacturing facilities to Maharashtra, but local partners were found to be incapable of scaling operations to match global needs due to lack of capital. “The fund will provide loans at minimum interest rates to interested domestic players,” a senior finance department official said.
Maharashtra already is home to ten major defence ordinance factories: one each in Thane, Ambernath, Pune, Chandrapur, Varangaon, Bhusawal, Jalgaon and Ambajhari and two in Khadki in Pune. These are being run by private and public players including Satyam, Mahindra and Mahindra, Tata Power, Ashok Leyland, Kirloskar and Bharat Forge.
The State government established its own defence manufacturing policy after the Centre opened the sector to 49% foreign direct investment (FDI).
The State government policy offers special incentives to defence sector manufacturing in notified special economic zones, including Industrial Promotion Subsidy (IPS) and for cleaner production, technology upgradation and water conservation, interest subsidy exemption from electricity duty, waiver on stamp duty and royalty refund.
