Karnataka's aerospace policy awaits Cabinet nod

The Karnataka government has finalised its much-awaited aerospace policy and the cabinet clearance is awaited. Through this policy the state government is looking at attracting $10 billion (Rs 55,000 crore) investment in the next 10 years and make Bangalore a major aerospace hub in South Asia.

“The policy draft was circulated to the stakeholders earlier this year and we have now fine tuned it. It is currently before the state cabinet for final approval,” M Maheshwar Rao, commissioner, department of commerce and industries said.

The new policy will be in place for a period of 10 years starting 2012. During the first phase of (2012-17), the state government is looking at attracting $4 billion investment into the sector. During the second phase (2017-22), it plans to attract another $6 billion worth of investment in the aerospace sector, the policy draft said. It also envisages creation of jobs for about 100,000 persons during this period.

The policy is likely to be announced in January 2013, a few days ahead of the forth coming Aero India 2013, the premier defence aviation industry exhibition in Bangalore.

The policy is aimed at increasing the contribution of Aerospace sector towards enhancing the share of industry in the State’s GDP from 28 per cent to 30 per cent in the first phase and to 32 per cent in the second phase.

Other main objectives of the policy are to make Karnataka a preferred global destination for manufacturing of aircraft, aircraft systems and sub-systems, assemblies and components. It is aimed at making Bangalore a magnet for global Tier-I suppliers and promote the state as one of the leading MRO hubs in Asia. Strengthening of R&D infrastructure for achieving innovative and cutting edge technologies.

Karnataka is already home to India’s aerospace industry. As early as 1940, India’s premier aerospace establishment, Hindustan Aeronautics Limited (HAL) started its activities in Bangalore. Other public sector undertakings like Bharat Electronics Limited, NAL, DRDO, ADA, ADE, ISRO among others are present in the city.

“Karnataka intends to take advantage of the promising scenario and strive to project the state as the aerospace hub for Asia in the next five years and as one of the top global aerospace and MRO destinations by 2022,” the draft Aerospace Policy document said.

The policy has been formulated through extensive consultation process with industry associations, trade bodies, related government departments, organizations and other stakeholders. The Aerospace Core Group committee constituted by the government of Karnataka also discussed the policy framework. The Confederation of Indian Industry (CII) and PwC offered suggestions.

Aerospace infrastructure shall include both new establishment, modernization of existing facilities, maintenance, repair and overhaul (MRO), testing facilities, laboratories, storage hubs and silos, warehouses, common technical and service centers, aerospace SEZs among others.

As part of its efforts to promote aerospace industry in the state, the Karnataka government has already earmarked 1,000 acres for Bangalore Aerospace SEZ and Park near the Bangalore international airport at Devanahalli. Already, land has been allotted to 27 companies including HAL, BEML, and Dynamatic Technologies among others.

Aerospace majors such as Boeing, Airbus, Bombardier and Embraer have evinced interest to take up space for setting up their India facilities in Bangalore. The park has potential to emerge as an aerospace industry cluster with an ecosystem to generate direct jobs to 242,000 people and house domestic and overseas firms in an integrated space with required infrastructure facilities.

Karnataka also proposes to establish a new Aerospace University in the state in association with a suitable knowledge partner. It is also proposed to have a flying training school to be located within the campus. The university and the flying school will be set up as a joint venture between the state and interested investors. It is also proposed to infuse capital into innovative ventures by creating an Aerospace Venture Capital Fund with a corpus of Rs 200 crore with participation of government (to the extent of Rs 50 crore), financial institutions and other investors.