India’s leading real estate advisory 360 Realtors has released a white paper on UP Defense Industrial Corridor (UPDIC) and how the ambitious project is set to accelerate the real estate market in the state of UP. The mega project which was announced in 2019 and has hitherto seen over 150 MOUs signed, comprising missiles, arms & ammunition, aerospace & satellite hardware, military apparels, radars & navigation systems, etc. These projects have channelized a total investment of around INR 25,000 crores (over USD 3 billion). This is marked growth over 2021, when the total investment was pegged at INR 1250 crores (USD 218 million).
India is one of the fourth biggest military markets in the world, comprising around 3.6% of the global spend, only behind the USA, China, and Russia. India’s Military spend has reached USD 87 billion in 2023, growing steadily at a CAGR of 5.1% over the past 5 years. The South Asian economy’s growing geopolitical influence necessitates a larger defense budget. However, Indian defense sector is highly import- reliant, which the government wants to reduce by developing indigenous capabilities.
“As a part of its strategy to lower import dependence, India has developed Defense Corridor in the state of UP. It is the second dedicated defense corridor alongside the one in Tamil Nadu (TN). These corridors will create ecosystems to design, engineer, and produce defense equipment & hardware. There is already a well-developed network of Ordinance Factories, HAL, military establishments, testing ranges, etc. which further makes the region conducive for defense enterprises to take off and thrive.” Quoted, Ankit Kansal, MD, 360 Realtors.
The UP-Defense corridor is backed by a world class infrastructure in the form of extensive highways, roadways, airports, etc. It is located in close proximity to the WDFC, which can seamlessly connect the manufacturers to other parts of India. In fact, around 57% of the WDFC either passes through UPDIC or is in close proximity. Likewise, it is also located strategically with the DMIC (Delhi Mumbai Industrial Corridor).
There are numerous incentives & impetus for manufactures planning to set up in UPDIC. Businesses can avail 7% capital subsidy. Likewise, 50% of logistics cost for raw materials (30% for finished goods) is available. Provision for 100% stamp duty waiver is their alongside 25% discounts in land prices.
Various big enterprises have started their operations at UPDIC. Adani has set-up a factory at Kanpur Node to produce short range missiles, ammunitions, etc. In the city of Kanpur, Genser aerospace is also building a factory to produce aircrafts with an intended yearly capacity of around 1200 units. Korwa-based Ordinance Factory has inked a JV with Russia based Rostec State Private Ltd. to produce Kalashnikov AK 203 assault rifles. Already first batch of 5000 units has been produced. Work is going at a full pace at the Brahmos Missile facility at Outer Ring Road (ORR) at Lucknow. The India-Russia JV will start operating from 2026 with an annual production capacity of around ~ 100 units. Tata will prepare a 500 acre Common Facility Centre in the region.
“The mega project will unlock new real estate opportunities across the state of UP. As mega units and anchor units are set, the demand for warehousing, fulfilment centres, distribution centres, industrial parks, office buildings are steadily growing. Similarly, the corridor is a thriving ground for MSMEs, start-ups, etc, which is also feeding into demand for office spaces, co-working spaces, etc. With growth momentum setting in, the demand for retail, mass housing, healthcare, schools, and common infrastructure will also pick up.” Added Mr. Kansal.
