Aerospace &

Defence
Outline

1 Global Aerospace & Defence Outlook

2 India Scenario

3 Advantage Gujarat

4 Dholera Special Investment Region

5 Opportunities Galore
 Global Outlook
Share of world military expenditure (2020)
Global Aerospace & Defence (A&D) market is estimated
to be valued at US$ 30 billion by 2025

Japan,
Global military expenditure was US$ 1960 Others,
2.55%
billion accounting for 2.2% of global GDP in 2020 25.52%

USA,
40.35%

The top five spenders in 2020 were the USA, China, India,
Russia, and UK accounting for 62.47% of global military
spending France,
2.73%
GermSaau
China,
Average military spending was 1.3% of GDP for countries in ndyi,
Russia,
13.08%

the Americas, 1.8% for Africa, 1.8% for Asia and Oceania and 2A.7r4a 3.20%

for Europe and 4.9% for the Middle East %bia, I

n
2.98%
d
UK, i
3.07% a
Source: World Bank; tps://www.weforum.org/agenda/2019/04/4-charts-that-show-the-state-of-global-military- ,
Source: Stockholm International Peace Research Institute (SIPRI) 2020 Fact Sheet
spending-now-at-its-highest-since-the-cold-war/; SIPRI Military Expenditure Database, Apr. 2020 3
 India Scenario
Key Facts
2nd largest armed forces in the world

3rd largest in military expenditure US$ 72.9 billion (2020) 9.5%

share in US$ 1.5
(2.9% of GDP and 3.7% of the global military expenditure) Global arms billion worth
import market of exports
during 2016- 2018-19
` Defence budget of India has grown at an average annual rate of
8.4% in the last decade (2011-2012 to 2021-2022)
20

FDI worth US$ 10.15 million (INR 61.52 crore) in Defence

Sector (Apr 2000 – Mar 2021)
US$ 5 billion US$ 7.3 billion
export target worth of
The Indian A&D market is estimated to reach around US$ 26 by 2025 ongoing DRDO
billion by 2025 projects

Source: Ministry of Defence, Govt. of India; Make in India; World Military Balance 2016 Report – International Institute for Strategic Studies; Stockholm International Peace Research InstituteMinistry of
Defence, Govt. of India; DIPP; Institute for Defence Studies and
1 US$ ~ INR 70 Analyses (IDSA)
Make in India - Defence Production
List of Products and Services eligible for Discharge of
Defence Production Policy 2018 Offset Obligations
• Defence procurement from Indian vendors worth Defence Products Small arms, mortars, cannons, guns,
US$ 10.56 billion (INR 73,918 crore) in 2018-19 howitzers, anti tank weapons and their
ammunition including fuzes, etc.
• 41 Ordnance Factories and 9 DPSUs contributing to
defence production of more than US$ 8.29 billion Products for Arms and their ammunition,
inland/ coastal Specialised Protective Equipment, etc.
(INR 58,000 crore) security
• Defence procurement from foreign vendors worth
Civil Aerospace Design, Development, Manufacture and
US$ 23.66 billion (INR 1,65,590 crore) in 2018-19 Products Upgrade of all types of fixed wing and
rotary wing aircraft or their airframes,
aero engines, avionics, instruments and
Defence Offset Policy related components
• 52 offset contracts signed by MoD worth US$ 11.79
Services (related to (a) Maintenance, repair and overhaul.
billion till March 2019 eligible products) (b) Up gradation/life extension
(c) Engineering, design and testing
• 452 industrial licenses issued for manufacturing of (d) Software development
Defence items till October 2019 (e) Quality assurance
(f) Training
• By 2030, US$ 13.5 billion worth of defence offset (g) Research and Development services
obligations would be discharged by foreign OEMs

Source: Ministry of Defence, Government of India; Institute for Defence Studies and Analyses (IDSA) reports
Robust Value Chain
FDI limit increased to 74% from 49% under automatic route to attract MNCs and give an impetus to the sector under ‘Make in India’

• Innovation for Defence Excellence (iDex) hubs across the country

Research & • US$ 15.4 million allocated to set up Technology Development Fund for R&D
Developmen
t • Defence industrial corridors to promote participation of startups and SMEs
Engineering • Introduction of Indigenously Designed, Developed and Manufacture (IDDM)
Design
• Potential of US$ 1 trillion by 2025 in the defence manufacturing sector
• Development of Manufacturing Clusters & Parks
Manufacturing

• Defence Production Policy 2018 to promote domestic production and assembly by

public sector, private sector and MSMEs
Assembly

• India’s current MRO market size is estimated to be around US$ 750 million
• Indian MRO spending is worth US$ 1.5 billion
Aftermarket
MRO
Source: Ministry of Defence, Government of India; https://www.maiervidorno.com/industry-expertise/aerospace-defence/
Industry Trends
India plans to spend US$ 130 billion on military modernization by 2028

‘Make in India’ Focus Asia Asia

26% Europe Europe
34%
33% 33%

Americas
100% FDI in defence sector 41% Americas
33%
Driver
Growt

2012 2025

MRO Market Share shifts to Asia

Defence Production Policy 2018
h

• Asia will be the largest market, accounting for 34%

global value
Growing defence budget • Global MRO spending to cross the US$ 110 billion mark
by 2025
• Indian MRO industry is expected to grow to over US$
Great potential of MRO Market 4.33 billion by 2025

Source: https://reports.weforum.org/manufacturing-growth/aerospace-industry; https://defproac.com/?p=1438

Competitive Landscape

Defence Public Sector Undertakings Private Sector International Investors

Advantage Gujarat
Manufacturing Powerhouse
Gujarat’s Gross State Domestic Product (GSDP) at current
prices grew at a CAGR of 10.02% from 2015-16 to 2020-21

11.07% US$ 21.89 billion

Manufacturing contributes 38% to the Gujarat’s Gross
contribution to worth of FDI
Value Added India’s factory inflow
establishments (Apr 2020–Mar 2021)

State contributes 17.44% to India’s total industrial output

% Share in India's Total Output

17.44%

14.33%
More than 3.5 million MSMEs in Gujarat
10.12%

6.72% 6.24%
Launched 8 new industrial estates in 2021 to promote
manufacturing MSMEs
Gujarat Maharashtra Tamil Nadu Haryana Karnataka
Gujarat - Favorable Destination for A&D Sector
Presence of engineering clusters and MSMEs to MRO - A growing Segment
1
support state’s A&D plans
Strategic location for MRO activities and proximity
2 to Delhi-Mumbai Industrial Corridor (DMIC)
Global Defense
17 operational airports and airstrips and upcoming Indian Defense
3 MRO Market
MRO industry to
International airport at Dholera to grow at
reach US$ 2.5
Establishment of GUJSAIL to enable the growth of CAGR 5.4%
4 the air hub and aviation industry billion by 2025
during
2019-25

MRO in Gujarat
• GUJSAIL has recently set up a General Aviation MRO in Ahmedabad
• It has parking facilities for two aircraft and is equipped with repair shop, store for parts and
equipment, offices and other facilities
• It can handle airframe heavy maintenance, component services, line maintenance and
inspection of private business aircraft and also planes used for other purposes

Source: Civil Aviation Department, Government of Gujarat

Upcoming Aerospace and Defense Infrastructure in Gujarat

A new high-tech aviation part in Ahmedabad by the state’s

civil aviation department to increase the awareness about the
sector amongst investors and policy makers

GUJSAIL to develop new facilities for MRO, freight and cargo,

tourists, aviation training, and aero-sports

State government has identified 11 sites across for the

development of new airports

Development of new airstrips in Ambaji, Palitana, Ankleshwar

and Dwarka.

Development of new heliports for the implementation of

UDAN-RCS, UDAN (Ude Desh ka Aam Naagrik) scheme of
Government of India.

Development of a new Special Economic Zone for aviation

sector to promote manufacturing in the sector Source: Civil Aviation Department, Gujarat
Advantage Gujarat
Manufacturing Powerhouse
Gujarat’s Gross State Domestic Product (GSDP) at current
prices grew at a CAGR of 10.02% from 2015-16 to 2020-21

11.07% US$ 21.89 billion

Manufacturing contributes 38% to the Gujarat’s Gross
contribution to worth of FDI
Value Added India’s factory inflow
establishments (Apr 2020–Mar 2021)

State contributes 17.44% to India’s total industrial output

% Share in India's Total Output

17.44%

14.33%
More than 3.5 million MSMEs in Gujarat
10.12%

6.72% 6.24%
Launched 8 new industrial estates in 2021 to promote
manufacturing MSMEs
Gujarat Maharashtra Tamil Nadu Haryana Karnataka
Dholera Special Investment Region
Advantage Dholera
Dessa
1. Potential of Defence and Aero
Chasbet
Manufacturing Clusters Khavad Radhanpu
• Provision of Helipad a 200 km r Mehsan
a
• Adequate space for Testing Airstrip / Nalily Bhuj
Runway a Kandl
150 km

Drangadhara Ahmedabad
• Strategic location of Ancillary Mundra a
Vadsa
Industries Morv 1 0 km
Wad h w
r
an
• Future expansion of industries i
Limbd
50 km
Vadodar
Mithapur
possible Chel Wankaner i a
a
Khambalia Ja Rajko Dholera L&T Ranoli
Porbandamnaga t Manufactu
r ring
r
2. Proximity to Dholera International Amrel Bhavnag facility
a
Airport i
r
• Proposed International Passenger and Keshod Parsoli
Reliance Naval
Cargo Terminal and Engineering
• Two runways for smooth operation Limited @ L&T
• Great potential to setup MRO Pipavav Shipbuilding @
Hazira

3. Presence of over 35 R&D facilities across Existing private sector Defence Passenger and Cargo
state focusing on manufacturing sector defence facilities Airports
Private Airstrips Airforce Base State Govt. Airstrips
4. Availability of contiguous land parcels for
Incentives (Aerospace & Defence Policy 2016)

Incentives offered as per policy

Capital Investment 1. Micro units: 25% of eligible fixed capital investment with ceiling of ₹ 12.5 lakh
Subsidy to MSME 2. Small units: 25% of eligible fixed capital investment with ceiling of ₹ 1.25 crores
A&D enterprises 3. Medium units: 25% of eligible fixed capital investment with ceiling of ₹ 2.5 crores

Land 100% reimbursement of the stamp duty as well as registration fee paid to Government
towards lease/sale/transfer of land. Government will support A&D testing ranges/sites in
State for testing of Products
Interest Subsidy 1. Mega A&D - ECB or DB - maximum of 2-5% or 50% of interest rate whichever is
lower; upto ₹ 10 Crores per annum for 5 years
2. Large A&D - ECB or DB - maximum of 2-5% or 50% of interest rate whichever is
lower; up to ₹ 5 Crores per annum for 5 years
3. MSME - ECB or DB - maximum of 2-7% or 50% of interest rate whichever is lower; up
to ₹ 1 Crore per annum for 5 years

GST SGST will be reimbursed subject to overall ceiling of 90% of GFCI as maximum eligibility
Reimbursement for reimbursement. It will be allowed for 10 years from the date of production.

Source: Gujarat Aerospace & Defence Policy 2016; http://www.imd-gujarat.gov.in/Document/2016-12-19_945.pdf

Incentives (Aerospace & Defence Policy 2016)

Incentives offered as per policy

Power Tariff and 1. Power tariff subsidy at ₹ 1 per unit in the billed amount for period of 5 years
Electricity Duty 2. 100% reimbursement for electricity duty paid by it for period of 5 years from the
date of commencement of production

Skill Development 1. Mega A&D - 50% of cost of training up to maximum of ₹ 1 lakh per employee per
annum for 25 employees
2. Large A&D - 50% of cost of training up to maximum of ₹ 1 lakh per employee per
annum for 20 employees
3. Large A&D - 70% of cost of training up to maximum of ₹ 10000 per employee per
annum for 10 employees

R&D Support 50% capital subsidy to maximum of ₹ 5 Crores

Equity Support Government may participate in the equity share capital of Mega or
Large A&D enterprise directly or through State PSU
Patent Assistance Assist MSMEs in patent and copyrights
Quality Certification Assistance in obtaining quality certification

Source: Gujarat Aerospace & Defence Policy 2016; http://www.imd-gujarat.gov.in/Document/2016-12-19_945.pdf

 Industrial Policy 2020 – Incentives to Industries

Capital Subsidy for Large Industries Research & Innovation

• Up to 12% of FCI for large units • Financial Assistance up to INR 5 crore for setting up
• Exemption of electricity duty for 5 years R&D & product development centers by private
companies

Incentives to MSMEs
Relocation Incentives

• Capital Subsidy for manufacturing sector – Assistance
up to 25% of of eligible loan amount up to INR 35
Lakhs
• Interest Subsidy for manufacturing & service sector
– Assistance up to 7% of interest levied on term loan
up to INR 35 lakhs per annum
• Acquiring Foreign Patented Technologies –
Assistance up to 65% of the cost of acquiring foreign
patented technologies with a ceiling of INR 50 Lakhs.
Processed patents will also be included.
• Provision of Re-location subsidy on case-to-case
basis e.g. units willing to relocate from other countries
and / or diversifying their supply chain through
investment in Gujarat
Government Land for Long Term Lease
• Facilitation to industries in getting “Government
Land” on long term lease up to 50 years to industrial
enterprises @6% of the market rate

Source: Industries & Mines Department, Government of Gujarat (http://www.imd-gujarat.gov.in/policy)

 Industrial Policy 2020 – Key Incentives for Industrial
Infrastructure
Common Environment Assistance for Sustainable
Development of Industrial Parks
Infrastructure Manufacturing

• Industrial Parks - Assistance upto 25% • Assistance upto 40% of eligible fixed • 50% of capital subsidy up to INR
of eligible fixed capital investment (50% capital investment in the project for 75 Lakhs to industries practicing
in case of Vanbandhu Talukas) in Common Effluent Treatment Plant, at least 50% waste recovery
building and infrastructure upto INR 30 Waste Management through Zero Liquid Discharge
Crore. Stamp Duty reimbursements will System, upgradation of existing as certified by GPCB
be given to developers (100% of Stamp CETPs, common spray dryer, common • Incentive to MSMEs @ 35% of cost
Duty) and individual units (50% of multiple effect evaporator etc. upto of P&M and to large industries @
stamp duty) INR 50 Crore 10% of cost of P&M maximum up
• Common Hostels / Dormitories – to INR 35 lakhs for implementing
Assistance of 50% upto INR 20 Crore. • Assistance upto 25% of project cost for cleaner production measures
set up/ relocation / retrofitting of
Development of Common Industrial
existing polluting industrial units into
Infrastructure
Green Industrial Estates upto INR 25 Skill and Training Support
• Assistance upto 80% of project cost for crore
set up of Industrial Infrastructure such
as construction and up gradation of • Assistance upto 50% of fixed • Fiscal incentive for skill
roads, warehousing facilities, fire installation cost to Common Boiler enhancement up to INR 15,000/-
stations, underground utilities , etc. Project by SPV constituted by per person per training to
upto INR 25 crore minimum 10 MSME upto INR 2 crore institutes

Source: Industries & Mines Department, Government of Gujarat (http://www.imd-gujarat.gov.in/policy)

Success Stories
Private companies have received 20 licenses for setting up A&D manufacturing units in Gujarat

Larsen & Toubro Ltd Jaivel Aerospace Pvt Ltd

• It has established a new green-field • It is a manufacturing, technology,

manufacturing – integration – testing complex processes and tooling organization
at Hazira, Gujarat set up in Sanand, Gujarat
• Currently executing the ‘K9 VAJRA-T’ Self- • It has invested more than INR 20
Propelled Howitzer Guns program - the largest crore and employs over 140
contract awarded to an Indian private people
company by the MoD
Unique Forge (Guj) Pvt Ltd
• Company has already invested more than INR
250 crore and employs more than 800 • It manufactures Bomb Body, Pistol
people Body, Gears, Driving Flange and
other forged products and supplies
to Ministry of Defence
• Investment of INR 3.5 crore and
employs over 35 people

Source: Industries Commissionerate, Government of Gujarat

Make in India - Defence Production :
K9 Vajra-T Howitzer Program
K9 Vajra-T Howitzer Program
• L&T was the first Indian private company to have won the biggest defense
contract through competitive bidding under the Make-in-India initiative
of Government of India to manufacture self-propelled Howitzer Guns
• L&T has setup a greenfield manufacturing cum integration and testing
facility -- Armoured Systems Complex (ASC) at Hazira near Surat under
the Gujarat’s Aerospace and Defense Policy
• ASC spread over 40 acres within the L&T’s 755-acre Hazira
Manufacturing Complex where the K9 Vajra Tanks are manufactured is a
flagship Defence Production Unit capable to manufacture and integrate
advanced armoured platforms such as self-propelled artillery howitzers,
future infantry combat vehicles (FICV), future-ready combat vehicles
(FRCV) or future main battle tanks
• K9 VAJRA systems have over 80% indigenous work packages and above
50% indigenization (by value)
• This involves the local production of over 13,000 types of components
per gun system through a supply chain of about 1,000 industrial
partners, mostly MSMEs, with about 150 of them being from Gujarat
• L&T has delivered all 100 K9 Vajra Tanks before scheduled time
Source: Ministry of Defence, Government of India
Opportunities Galore

Artillery Combat Shipbuilding Aircraft Ammunition &

Vehicles Assembly and Small Arms
Manufacturing

Defence-tech A&D Casting & Maintenance, Research &

fabrics and Electronic Forging Repair & Development
Composites Systems Products Overhaul
Connect for more Information

Industries Commissionerate
Block No. 1, 2nd Floor, Udyog Bhavan,
Gandhinagar, Gujarat, India - 382 010
http://ic.gujarat.gov.in/
Phone: 079-23252683
E-mail: comind@gujarat.gov.in

Industrial Extension Bureau (iNDEXTb)

Block No. 18, 2nd floor, Udyog Bhavan,
Gandhinagar, Gujarat, India – 382 010
www.indextb.com
Phone: 079-2325 6009
E-mail: md.indextb@gmail.com