MP Aerospace & Defense Production Policy: Complete Guide

Units which are into designing, engineering, manufacturing material used for components, sub-assemblies, etc. to domestic or international OEMs/Tier I/Tier II/Tier III companies of Aerospace or Defence PSUs, Institutes, Research and Development organizations, Indian Offset partners, all Defence and security forces of India or any item/category that is procured by Ordnance Factories and Defence PSUs.

Manufacturer of any products or equipment of Aerospace and Defence sector, certified by Government of India or its Competent Authority, shall be eligible to avail incentives under this policy.

Fiscal Incentives

Infrastructure Development Assistance 50% assistance for developing power, water, gas pipeline, road, drainage and sewage infrastructure upto the factory gate subject to a maximum of ₹5 Crore if the investor acquires private land or gets undeveloped Government land for setting up of the unit

Green Industrialization Assistance Capital subsidy of 50%, max upto ₹5 Crore for setting up of waste management systems (such as Effluent Treatment Plant, Sewage Treatment Plant, pollution control devices etc.) and maximum of ₹10 Crore for setting up Effluent Treatment Plant with Zero Liquid Discharge. Sanctioning in 2 equal annual instalments

Assistance for IPR and Organic Certification

IPR Assistance: 100% reimbursement of expenses incurred for filing patents, copyrights, trademarks, and geographical indications (GI), subject to a maximum of ₹10 Lakh per unit.

Incentive to Provide Employment to Differently Abled Persons Units providing employment to Persons with Disabilities (minimum 5% of total workforce) will be eligible for following incentives: 1. 100% reimbursement of skill development expenses upto ₹5,000/- per employee for 3 months from date of joining. 2. Employees PF/ESI assistance: Reimbursement of employee’s contribution- maximum ₹6,000/per month for 5 years. 3. Medical insurance premium reimbursement for 5 years

Basic Investment Promotion Assistance

Basic Investment Promotion Assistance for large units shall vary between 40% to 10% based on the below formula:

BIPA=IF(EFCI>2000, 200,IF(EFCI<=50, 0.4*EFCI,MIN(15 + 0.08*(EFCI-50) + (EFCI/12) * ((1/ (1+EXP(-5.9*(1 – EFCI/2490))))(1 – EFCI/2490)) + 9.3(1 – EFCI/2500),0.4*EFCI,200)))

Sample Values of BIPA are as follows:

Investment (in ₹ Crore)	Percentage	Amount (in ₹ Crore)
50-85	40%	20-33.6
100	36%	35.9
125	32%	39.7
150	29%	43.4
175	27%	47.2
200	25%	50.8
225	24%	54.4
250	23%	58
300	22%	65.1
350	21%	71.9
400	20%	78.6
500	18%	91.4
600	17%	103.6
700	16%	115
1500	12%	180.1
2000	10%	200

Export Multiple

The Export Multiple shall vary from 1.0 to 1.3 for exports ranging from 25% to 75% of the total production.

ExportMultiple(EM)=IF(ExportPercentage<25%,1,IF(ExportPercentage)

Export %	Multiple
25	1.00
30	1.03
35	1.06
40	1.09
45	1.12
50	1.15
55	1.18
60	1.21
65	1.24
70	1.27
75	1.30

FDI Multiple

The FDI Multiple will be applied to BIPA based on the percentage of FDI equity in the unit. For FDI equity between 26% and 50%, the multiple will range from 1.1 to 1.2, while units with more than 50% FDI equity will receive a fixed multiple of 1.2.

FDI Multiple =IF(FDI<=51, 1.1 + (FDI-26)*(0.1/(51-26)), 1.2))

FDI Equity %	Multiple
20	1.000
25	1.000
30	1.116
35	1.136
40	1.156
45	1.176
50	1.196
51	1.200