The cabinet meeting was chaired by Chief Minister Shivraj Singh Chouhan.
"The cabinet has not only approved Defence Equipment Production Investment policy but has also decided to include Gwalior under it," cabinet spokesperson Narottam Mishra said.
The policy was formulated to help those investors who are willing to invest Rs 500 crore or more for setting up public and private sector defence manufacturing units near Katni, Itarsi, and Jabalpur.
"Under the policy, a 50-acre undeveloped government land will be provided and even land belonging to the closed down and sick units would be purchased for setting up defence equipment manufacturing units," Mishra said.
Subsidy will be provided for creating infrastructure and dedicated escort officers would be provided for special units, besides offering a special package to those units making a permanent investment of Rs 500 crore, he said.
The policy also has a provision for providing subsidy for transporting goods and raw material to and fro the ports. The cabinet also ratified the decision to make Sanjay Leela Bhansali's film 'Mary Kom' tax-free from the date of publication of gazette notification, Mishra said.
"It also approved the policy to purchase private land with mutual consent for setting up public sector units. The payment for the same will be paid as per the Collector Guideline," he said.
With an aim to give boost to solar energy production, the cabinet has authorised Madhya Pradesh Madhya Kshetra Vidyut Vitran Company to set up 5 MW capacity solar power plants on rooftops of buildings as a pilot project in Indore, Bhopal and Jabalpur, he added.