While a lot of countries are witnessing congestion in air traffic, India has not been able to fully capitalise on its civil aviation capacity. Now, with the onset of Production linked incentives, a drone revolution is about to begin in India.
India to become Aatmanirbhar in drones
On 15th September 2021, the Indian government approved the PLI scheme for drones and their components. The government will provide a total incentive of Rs 120 crore for the same. These 120 crores will be allotted for three financial years. The schemes cover a variety of drone components such as:
- Propulsion systems(engine and electric), power systems, batteries, launch and recovery systems
- Flight control module, ground control station, and associated components
- Communications systems, Cameras, sensors, Detect and Avoid’ system,
- Emergency recovery system, trackers, etc., and other components critical for safety and security.
To avail incentives under the PLI scheme, a drone manufacturer company should fall under any one of two criteria:
- MSME with over a minimum turnover of 2 crores
- Non-MSME with a minimum turnover of 4 crores
For drone components companies applying for incentives, an MSME of a minimum turnover of 50 lakhs is eligible, while for non-MSME, the minimum annual turnover is Rs 1 crore.
The government may expand the list of eligible components in the future as the drone industry evolves. The government has also agreed to widen the coverage of the incentive scheme to include developers of drone-related IT products as well. The rules made regarding the availing of incentives are quite flexible. The government has also taken care of the possibility that the drone sector does not get monopolised by some big companies.
Impact on the sector
The total incentive worth Rs 120 crores is almost twice the combined turnover of all domestic drone manufacturers in 2020-21. The civil aviation ministry is expecting a total investment of Rs 5,000 crores in the next 3 years. The annual sales turnover of the drone manufacturing industry is expected to grow from INR 60 crores in 2020-21 to over INR 900 crores in 2023-24. The drone manufacturing industry is alone expected to create more than 10, 000 direct jobs in the next 3 years.
The drone industry may have hogged the limelight, but in terms of scale, the drone components and service industry are much bigger. The industries such as operations, logistics, data processing, traffic management are expected to grow to over Rs 30,000 crores in the next three years. The exponential expansion in the sector will create more than 5 lakh jobs in the next three years.
Earlier in August, the government had liberalised the drone sector through a set of new rules and regulations. The new rules reduced bureaucratic hurdles and made it easier and cheaper for new startups and old companies to operate in the sector.
India has already made significant developments towards increasing drones’ capacity in defence. In September itself, India and the US signed a pact to develop drones that can be launched from aircraft.
In August 2021 Directorate General of Civil Aviation (DGCA) permitted 10 organisations, including state governments such as Karnataka and private companies like Mahindra and Mahindra Ltd, Bayer Crop Science, Indian Institute of Tropical Meteorology, Pune, and National Health Mission (Mumbai), to use drones for a year. On 14 September 2021, the government approved ICMR and IIT-Bombay to use drones for the delivery of vaccines.
Welcoming step- says the industry
The industry has welcomed these developments with open hands. Chirag Sharma, CEO of Drone Destination Private Limited said- “PLI will encourage indigenisation and the Drone Policy will galvanize usage of drones. Now the costs can only come down with scale-up. The industry needs to attain a size of about Rs 5000 crore to have some serious cost reduction”. He further added “The incentive when calculated together with components and IT support will have a cascading benefit effect on the end product”. Predicting the fall in prices of drones, Paras Jain, Chief Executive Officer of Indo Wings said- “The government expects Rs 5000 crore of investment to pour into the sector in the coming year, which would be encouraged by the incentives. A significant portion of this would go to R&D given the current stage of the industry which would pave the way for numerous cost-cutting developments that would greatly reduce the final price of the drones in a 3-5 year time horizon”.
Smit Shah, Director, Drone Federation of India said- “the thresholds for companies to be eligible for the government’s PLI scheme for drones are also encouraging as it will promote research and development of drones in India.” He also requested the government to take steps towards the development of intellectual property to boost the drone industry.
With the Modi government’s emphasis on Aatmanirbhar Bharat and the Make-in-India scheme, PLI has emerged as a key arm of both of these initiatives. The amalgamation of all these initiatives will help the Indian drone sector to achieve its potential of being a multi-billion dollar industry.