The Odisha government is sparing no effort in rolling out the red carpet for defence manufacturers. From promising subsidies, to assurances of 24-hour electricity, and promoting its naturally abundant mineral wealth and coastline as strategic incentives for defence manufacturing - the state is doing it all.

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Defence Policy Is A Sop Fest

On Tuesday, the state unveiled the Odisha Aerospace And Defence Manufacturing Policy 2018. The policy allows for a capital subsidy of Rs 100 crore per company, for the first three defence OEMs (original equipment manufacturer) to set up base in Odisha.

The only stipulation is that these companies will have to make a minimum investment of Rs 1,000 crore in plant and machinery, and hire at least a thousand employees.

According to the policy, the Odisha government will also help set up the state's first aerospace and defence manufacturing park. The government also promised a subsidy of up to 50 percent on costs of land, building, plant and machinery, acquired through participation of the private sector.

“The policy aims to carry forward the process of industrialisation in the state through the promotion of aerospace and defence manufacturing enterprises, generate employment opportunities and provide value-addition," said Sanjeev Chopra, principal secretary (Industries), Odisha government. The policy also promises 24-hour power supply to all manufacturing units and dedicated industry feeders when production commences.

Are Companies Convinced?

The Make In Odisha Conclave has seen its fair share of defence companies, from Lockheed Martin, to BEML and Punj Lloyd attend the summit. But none of the names CNBC-TV18 spoke to had outlined any definitive plans to set up manufacturing bases in Odisha.

Arms manufacturer Punj Lloyd was non-committal about manufacturing in the state, but said that a decision could be taken depending on the company's order book. “We are hoping for the government of India order for air-defence guns to come through, and we will test the product here in Odisha. So, there is potential to manufacture it here as well,” said Ashok Wadhawan, president (Defence Manufacturing), Punj Lloyd, speaking exclusively to CNBC-TV18.

It must be noted that Punj Lloyd supplies components to HAL Koraput, in Odisha. The good news for the state however is that Punj Lloyd has said it was as focused on aerospace, to grow the precision-arms vertical of its business.

For all the government's focus on aerospace, aviation major Lockheed Martin has also stopped short of showing intent at setting up a manufacturing base in Odisha. “There are multiple opportunities in several industrial hubs, not just Odisha," said a Lockheed to official to CNBC-TV18, "So, there is no decision on whether we will be investing here".

While names like BEML have declined opportunities to manufacture defence equipment in Odisha on account of capacities in other parts of the country, BEML chairman and managing director, DK Hota told CNBC-TV18 that the company would be open to manufacturing mining equipment in the state. “We would like to manufacture mining equipment for Mahanadi Coalfields Ltd, in Odisha, provided we receive tax incentives," said Hota, speaking exclusively to CNBC-TV18.

While an Odisha government press statement made no mention of any investments in defence, government officials confirmed that a grand total of one defence company - a rather nondescript Chivaro Technologies - showed intent to invest in defence and aerospace. "There is one proposal of Rs 1,650 crore in defence, it is from Chivaro Technologies," said Chopra, while addressing the media.

First Published:Nov 13, 2018 8:33 PM IST