At political centrestage in UP: Defence corridor has taken off but law & order key

Both are part of the ambitious Uttar Pradesh defence corridor that finds itself at the political centrestage with the BJP projecting it as an example of the state’s turnaround from an industry hostile image and the Samajwadi Party questioning its very existence.

An audit of the corridor reveals that the mega project – targeted to attract investments worth Rs 10,000 cr by 2024 – is precariously placed and central to its success will be the state’s law and order situation.

The composites facility, set up by Lohia Aerospace, is seeking to establish itself as a unique player plugged into the global defence ecosystem, with the company even acquiring an Israeli company and turning into a manufacturer of key components for unmanned combat aerial vehicles with an order book that is likely to cross Rs 100 cr shortly. Its promoters are betting on the low production cost in UP.

The sprawling Ordnance Factory Board facility at the other end of Kanpur spiralled towards a slow death over the years, falling victim to a system that thrived on political patronage for jobs, steady pilferage and policy ambiguity. An attempt is underway to revive it as a PSU that will make bulletproof jackets and personal items for troops.

Cutting Edge Plans

Several projects have been planned for the corridor, the latest being the facility near Lucknow to manufacture Brahmos missiles that is likely to spawn off a large base of ancillary industries. With an initial investment of Rs 300 crore, the plant is likely to receive orders worth thousands of crores in the coming decade.

Cutting edge technology is also likely to be injected in the corridor with several start-ups and technology innovation companies allocated land in the Aligarh node. Among companies allotted land here is a start-up (New Space Research) working on swarm drone technology.

At Lucknow, Aerolloy Technologies has already rolled out a Rs 300 cr project to make titanium and super alloy components for military use. In Kanpur, MKU is planning to set up India’s first plant that would manufacture critical fibre raw material that forms the core of bullet proof products.

Land has already been allotted to 26 industries and MoUs are in place with 73 companies interested in setting up plants in different nodes of the corridor.

Buoyed by the sharp interest in companies for land in Aligarh, the state is considering plans for a hub near the upcoming airport at Jewar as well. “At Aligarh, every plot of available land has been sold out. We plan to expand this node as we get more offers. There is a possibility of a MRO (Maintenance Repair and Overhaul) hub at Jewar as well,” Awanish Kumar Awasthi, CEO of the UP Expressways Industrial Development Authority says.

State officials have also been in talks with the industry on leveraging the new drone policy to move business to the corridor.

A Reality Check

Initially projected as hub for foreign investments, the corridor has hit a reality check when it comes to companies willing to set up shop. Almost all industries that have taken up land are domestic players.

A few spectacular plans, including a touted Rs 38,000 crore planned investment by Ukrainian aircraft manufacturer Antonov with an Indian partner, have been quietly dropped.

Industry insiders say that foreign companies remain reluctant in committing to the corridor as of now, given the uncertainty they face in India.

“Foreign companies are likely to wait and watch. They also have the feedback that doing business in the state is no easy task…,” an industry insider says.


Law and Order Central

One thing that all industry players are in agreement is that the law and order situation of the state will be central to the success of the corridor. Not just the security of expensive equipment being set up and high value shipments being trucked across the state, companies feel that attracting high skill employees is contingent on strict law enforcement.

The stranglehold of local strongmen has significantly diminished, a senior executive working in the defence sector near Kanpur for over a decade says. The highly technical sector is looking to leverage cheap locally available labour but certain top jobs will require attracting talent that is being wooed by firms based in cities like Bengaluru and Hyderabad.

State officials agree that law enforcement has to remain a priority. “When we started, we had three negatives – law and order, general state of the industry and the lack of any defence manufacturing base. By all indicators, we are one of the best performing states in the country now when it comes to law an order,” Awasthi says.

Political Dividends

The corridor story remains a key theme for the BJP’s poll campaign as a symbol of change for the state. However, its resonance among voters is still hard to judge, given the gestation period that defence manufacturing has as an industry.

Real political dividends can be reaped when manufacturing gets into full swing in the multiple nodes of the corridor, creating thousands of high paying jobs and reshaping local economies. This, industry experts say is likely to take at least 3-5 years.