UPDIC: A Giant Stride in Aerospace & Defence

By Editor 09-Oct-2020

News

The Uttar Pradesh Defence Industrial Corridor (UPDIC) is an aspirational project that intends to reduce foreign dependency of Indian Aerospace & Defence Sector, says the state government. UPDIC is expected to promote indigenisation and support the ‘Make in India’ initiative, helping meet Aerospace and Defence equipment requirements worth over US Dollars 250 billion by 2025.

With the aim of achieving self- reliance in the Aerospace and Defence (A&D) sector, the Government of India announced the setting up of two Defence Industrial Corridors, one in Uttar Pradesh and the other in Tamil Nadu, in the Union Budget of 2018-19. The country’s requirements in A&D are estimated to be over US Dollars 250 billion by 2025. The items needed range from military aircraft, submarines, helicopters, land systems to weapons and sensors and the defence industrial corridors are intended to
tap this big opportunity.

Uttar Pradesh is the fourth largest state and the third largest economy in the country. With a population of more than 200 million, UP has the highest number of available labour force and is one of the top five manufacturing states in India. The state also ranks first in terms of number of MSMEs in India.

According to the state government, the Uttar Pradesh Defence Industrial Corridor (UPDIC) is an aspirational project that intends to reduce foreign dependency of Indian Aerospace & Defence Sector. It received an encouraging start with the announcement of investments worth over Rs 3,700 crore in defence production at a meeting held at Aligarh in August 2018. The Uttar Pradesh Expressways Industrial Development Authority (UPEIDA) was made the nodal agency to execute the project in conjunction with various other state agencies.

The UP government is establishing Common Facility Centres (CFC), Centres of Excellence (CoE) and Skill Development Centres to provide best practices and facilitate research and development as well as skill development. In short, the corridor not only targets at setting up of manufacturing hubs but also aims at generating employment opportunities to cater to the most populous state in the country.

Nodes planned

The UPDIC was initially planned across six nodes in the state, Lucknow, Kanpur, Jhansi, Agra Aligarh, Chitrakoot, which spread across Central, East, West region of Uttar Pradesh and along the Golden Quadrilateral connecting Delhi – Kolkata supported by networks of the following expressways: Yamuna Expressway; Agra – Lucknow Expressway; Purvanchal Expressway; Bundelkhand Expressway; Gorakhpur Link Expressway and Ganga Expressway. Leading academic institutions IIT Kanpur and IIT Banaras Hindu University Varanasi were approved by Government of Uttar Pradesh for establishment of Centre of Excellence (CoE) related with Defence Industrial Corridor and allotted significant amounts.

Meanwhile, the Uttar Pradesh Defence and Aerospace Unit and Employment Promotion Policy (First Amendment) 2019 was published by Government of Uttar Pradesh with the objective of attracting investments in UPDIC. Guidelines/procedures for allotment of industrial plots in the Defence Corridor were also published for seamless land allotment procedures.

Numerous MoUs were subsequently signed between UPEIDA and various companies to establish manufacturing units at the nodes for UPDIC and land allotment also was initiated for Aligarh and Kanpur nodes. Signing of an MoU between UPEDIA and Indian Navy is in the pipeline to facilitate identifying problem areas, finding solutions and manufacturing through Indian Industry. There is also a proposal to establish a Defence Park as a joint venture of UPEIDA and IIT, Kanpur on a 30-acre land in Shivli near the IIT. Another proposal of CFC at Lucknow is being initiated, to carry out prototyping, designing, skilling and incubation.

The first major priority of the UP Government is the creation of an industry-ready land bank for setting up of infrastructure for the A&D industries. For this, around 5071.19 hectares of land is proposed to be acquired in a phased manner for the corridor.

Prime Minister Narendra Modi, Defence Minister Rajnath Singh and UP Chief Minister Yogi Adityanath have played a major role in the smooth roll out of the UPDIC project. While the Prime Minister represents the Varanasi Lok Sabha constituency in Uttar Pradesh, Rajnath Singh is a former Chief Minister of the state who won from the capital Lucknow in the 2019 General Election. Meanwhile, Yogi Adityanath is a veteran administrator who is keen to lead the state on the path of development.

Land acquisitions

Meanwhile, the UP government has begun acquiring land for the corridor. Announced by Prime Minister Modi at the UP Investors Summit in February 2018, UPDIC is estimated to attract investments of Rs 20,000 crore in the arid Bundelkhand region and create employment for 2.5 lakh people.

Land for the flagship project is being acquired in two phases. “As much as 3,788 hectares of land is to be acquired across four nodes as part of Phase I, out of which over 1,455 hectares has been identified in Jhansi, Kanpur, Chitrakoot and Aligarh. Of this, around 1,200 hectares has already been acquired, mainly in Jhansi, Aligarh and Chitrakoot,” said a top official of UPEIDA.

Even though Lucknow, Jhansi, Chitrakoot, Aligarh, Kanpur and Agra were initially proposed as the six nodes, the good response to UPDIC led the UP government notify another three nodes for investment: Meerut, Ghaziabad and Gautam Buddha Nagar. According to officials, the project is being implemented in Bundelkhand given the availability of cheap land and the existence of a strong ancillary base in the region.

“UPDIC will promote indigenisation and support the ‘Make in India’ initiative, helping meet equipment requirements worth over US Dollars 250 billion by 2025. It would also promote ancillarisation and development of MSMEs for the A&D sector, making UP a preferred destination for the purpose and boosting India’s defence exports,” said an official.

The potential of UPDIC was recognized by investors at the DefExpo 2020 in Lucknow, where 23 companies signed MoUs worth Rs 50,000 crore with the state government for investment in the corridor. Ancor Research Labs became the first investor in the corridor at DefExpo and was allotted 25 acres of land in the Aligarh node to create high-end defence testing facilities and manufacture defence grade communication systems.

Speaking after presenting the state’s budget for 2020-21, Chief Minister Yogi Adityanath said UPDIC would help turn Uttar Pradesh into a US Dollars 1-trillion economy by 2024. The government would soon create a land bank of 25,000 acres to facilitate setting up of industries on the corridor, he said. “UP’s aim is to become a net exporter. In fact, even if half of the MoUs that were signed at the DefExpo are realised, we will be able to generate employment for 2.5 lakh people,” said the Chief Minister.

The corridor has several avenues for investments, including defence parks at Jhansi, Agra, and Kanpur; aerospace parks at Lucknow, Kanpur, and Agra; leather and textile hubs at Agra; and engineering/electronics manufacturing hubs at Agra, Kanpur, Gautam Buddha Nagar and Ghaziabad.
The state government has also offered major incentives in its Defence & Aerospace Policy 2018 to attract investment, including reimbursement of 25 per cent of land cost, transportation subsidy, and reimbursement of 75 per cent of the cost of technology transfer to anchor units.