Gandhinagar: Gujarat is likely to become a major defence manufacturing hub with a number of private sector companies planning to set up factories in the state, defence minister Manohar Parrikar said on Thursday.

The centre has approved close to 20 licences for defence production in Gujarat, he said while speaking at a seminar at Vibrant Gujarat Global Summit in Gandhinagar. He said the defence sector is encouraging products that are “designed and developed” in India, aimed at building, enhancing and promoting the designing capabilities of Indian manufacturers. In turn, this will help them manufacture world-class products on the back of the ‘Make in India’ programme.

Speaking at the same event, Gujarat chief minister Vijay Rupani said an agreement has been signed between Airbus France and Dholera Industrial City Development Ltd (DICDL) of the government of Gujarat for setting up of an aerospace and defence cluster. He said that the state government is in the process of investing Rs3,000 crore on infrastructure to develop the Dholera region as a world-class city.

This strategic partnership will also ensure the establishment of ancillary industries in this area, the Gujarat government said in a media statement. Details like the production capacity and investment numbers were not revealed by the state government.

An investment agreement between Anil Dhirubhai Ambani Group (ADAG)’s Reliance Defence and Engineering and Gujarat government was signed in the presence of the chief minister and defence minister with a proposed investment of Rs2,500 crore in the defence sector in Gujarat.

Recently, the Gujarat government has come out with a new aerospace and defence policy, promising a slew of incentives and sops.

The central government has made it a priority to modernize the Indian defence sector and lower India’s dependence on imports. For this, the government has relaxed the FDI policy in defence allowing foreign investments of up to 49% through the automatic route and above 49% under the approval route in cases where the investments result in access to modern technology.

“India has developed its own artillery gun today after 30 years and the field trial of it (Dhanush) is completed,” Parrikar said while adding that another such weapon is also in the final stages of testing. The defence minister said that light combat helicopters by Hindustan Aeronautics Ltd have been successfully tested and certified.

He said there was more to defence than the fighters and helicopters and entrepreneurs and corporate houses should consider component manufacturing.

“Defence is a strange business. If you start manufacturing cars, you have the option to sell your vehicle to several consumers. However, in this case, the consumer is only one —Government of India and department of defence. (Having) one consumer has its own problems. You have to keep the consumer happy. You have to give a product that syncs with the capabilities and modernization of the armed forces to bag the order,” Parrikar said.

“This is a strange type of situation where one has to take a call on whether you invest first or the orders are first,” he added.

Parrikar said the situation for Indian manufacturers will improve going forward with government relaxing licensing procedures as the new Defence Procurement Procedure will encourage indigenous designing, development and manufacturing of defence equipment, he said.