Assam Aerospace and Defence Manufacturing Policy

Barun Brahmachari

India’s North East: A region once neglected by every government and every company is today  emerging as a powerhouse of growth, and this resurgence is being led by Assam, a state that is at the heart of India’s Act East Policy and is often dubbed the Gateway to South East Asia.

For decades, the state was a laggard, marred by violence and hartals, and where just two industries operated—oil and tea—owing to the vast availability of these natural resources. To even think beyond these industries was a pipe dream until March 2024, when PM Narendra Modi laid the foundation stone of the state’s first semiconductor facility in Jagiroad—a Rs 27,000 crore mega project being undertaken by the Tata Group. Nobody in the country would have imagined semiconductors being made in Assam, but work on the plant is in swift progress, with the first set of chips expected to roll out by 2026.

So what changed so drastically in the state? The Leadership Factor! The state’s CM, Dr. Himanta Biswa Sarma, is a taskmaster, and going by his own words, he is planning to make the state one of the top five states in the country in the coming years. Assam is hosting the second edition of its investment summit, Advantage Assam 2.0, in a bid to woo more investors by showcasing recent progress made in the state. But not just oil refining or tourism or semiconductors; the CM has placed sights on an ambitious sector—Aerospace and Defence Manufacturing. The state is pitching its strategic location, presence of defence bases, proximity to ASEAN, and strong federal government support to drive home its ambitious plans. Just days before the Advantage Assam 2.0 Summit, the State Cabinet passed the Aerospace and Defence Manufacturing Policy with various steps for companies to set up their bases in Assam.

The policy offers some distinct features categorised into three different segments—

n For Defence MSMEs, PSUs, and large private companies, it is offering a host of fiscal support measures, including a 30% capital interest subsidy, a 100% stamp duty concession, a 100% SGST reimbursement & electricity duty waiver, and a 50% land subsidy.

n 10,000 per person as a skill development initiative, among others.

n For Maintenance, Repair, and Overhaul (MRO) units, is offers up to 25% capital investment subsidy, interest subsidy, SGST reimbursement, and power tariff subsidy, among others.

n For defence startups, incentives include up to 25% seed grant incentives, up to Rs 2.5 crore.

n Go to Market Support, rental subsidy, and access to a pool of Assam Defence and Electronics Startup Growth Fund.

n The policy also offers customised incentives to large investors committing over Rs 500 crore and above. Through this host of incentives and support measures, the state seeks to attract companies from aircraft manufacturing, avionics & electronic systems, defence equipment & systems, MRO services, simulation and training, and research and development fields. The state’s plans and offerings through the Assam Aerospace and Defence Manufacturing Policy 2025 are promising, and with the Union and State governments’ mega industrialization push in the region, we may soon see an Airbus or a HAL setting up their base in Assam. From then to now, from oil to semiconductors and possibly defence manufacturing, Assam has surely travelled a long distance.