Bangalore: Making a strong pitch for investments in defence and aerospace sector, Large and Medium Industries Minister Murugesh Nirani on Thursday announced that the Karnataka government is planning to offer enhanced incentives to MSMEs to provide a level playing field and make them competitive as part of the new Aerospace and Defence policy.

He said the new policy will be introduced as part of the government's "proactive approach to update our policy to provide a key push for this important sector," according to a press note released on Thursday.

Nirani added that the government is also in the process of setting up a 1,200-acre defence and aerospace park in Devanahalli, which may also be officially announced at the end of December.

The new policy would concentrate on drawing Original Equipment Manufacturers (OEM) to the state and the state government is looking to create clusters not only in Bangalore but other parts of the state like Tumkur where the helicopter complex under Hindustan Aeronautics Limited (HAL) is coming up, Chamarajnagar and even Chitradurga which is turning into an important hub for units of the Defence Research and Development Organisation (DRDO).

Karnataka positioned itself as a prime location for aerospace & defence industry in India. Establishment of institutions and PSUs like HAL, NAL, DRDO, ISRO and IISc created a strong ecosystem and as a result over the years, leading global players have set up their shops in the state.

Nirani, meanwhile, noted that Karnataka is already leading the realm when it comes to a strong industrial base. "Our Gross State Domestic Product (GSDP) is approximately Rs 17 lakh crore and accounts for the highest total exports among all states in India," he said.

Elaborating on the state's predominant position in the defence and aerospace sector, the minister said 25 per cent of India's aircraft and spacecraft industry is based in Karnataka.

"More than 67 per cent of all aircraft and helicopters manufacturing for defence services is done in Karnataka and it contributes to 65 per cent of the country's aerospace related exports. We are home to more than 2000 small and micro enterprises along with 70 per cent of India's supplier base which execute subcontracting work for the Defence PSUs" added Nirani.