Changes in drone policy to boost manufacturing and exports

STORIES, ANALYSES, EXPERT VIEWS

Changes in drone policy to boost manufacturing and exports

The drone industry is the new focus of the government of India. After giving a fresh lease of life to the drone industry with the new, liberalised regulations with the Drone Rules 2021 and approving PLI (Productivity Linked Incentives) scheme for drones and drone components, the government has now imposed a ban on import of drones in the country. Along with giving the much-needed boost to drone manufacturing in India, Nidhi Singal (Senior Associate Editor · Business Today) writes “the government is also helping Indian drone manufacturers with made-in-India exports…..”

What gave the sector wings is the government releasing a set of liberal regulations in August that made it simpler to own and operate drones. Barely a month later, the government approved a three-year production-linked incentive (PLI) scheme worth Rs 120 crore, which is double the combined turnover of all domestic drone manufacturers, in FY21. The government hopes the PLI scheme will attract investments worth over Rs 5,000 crore in three years.

Earlier and present policies: In the earlier policy, Singal notes, Nano category (less than or equal to 250 grams) drones operating below 50ft/15 meters above the ground level required Equipment Type Approval from WPC Wing, DoT for operating in de-licenses frequency bands, it did not require import clearance from DCGA or import license from the Directorate General of Foreign Trade (DGFT). Imports of Unmanned Aircraft System (UAS)/Unmanned Aerial Vehicle (UAVs) -- or remotely piloted aircraft drone -- were in ‘restricted’ category and required prior clearance of the Directorate General of Civil Aviation (DGCA) and import licence from DGFT.

The new revised policy prohibits imports of completely built up (CBU), Semi-knocked down (SKD) or completely-knocked-down (CKD) drones in India with a few exceptions, which includes import of drones for defence & security purposes from subject to import authorisation issued by DGFT in consultation with concerned line ministers. The new policy also states import of drone components shall be free. Earlier, there was no clear notification that drone parts can be imported, as drones were restricted product, and the manufacturers were finding a tough time.

As the new liberalised policy will see increased adoption of drones across sectors, including agriculture, infrastructure, amongst others, there is a huge potential in exporting made in India drones as well, writes Singal.

The domestic drone manufacturers are applauding the government’s move stating it to be a move that can promote drone manufacturing within the country as the ban on import of drones will increase their demand in the country. However, 90 per cent of the drones used in India are imported and this decision might disrupt the industry temporarily.

Potential markets: Research firm, Research and Markets estimates that India’s UAV market will be worth $1.81 billion (Rs 13,575 crore) by FY26. The Drone Federation of India has a more bullish estimate: Rs 50,000 crore in the next five years.

“While agriculture, real estate, homeland security and defence will be the few areas that will be the biggest drivers for the industry, strategic defence procurements are not part of this estimate. That said, if the potential of drone delivery and drone taxis is unlocked quickly, the market will expand 10X,” said Smit Shah, Director of Partnerships at the Drone Federation of India.

Until last year, homeland security accounted for nearly 70 per cent of the Indian market, according to industry sources. The rest was allowed for civil use only after exceptions by the DGCA, India’s civil aviation regulator. Outside of the defence sector, drones are mostly used in agriculture for crop dusting and monitoring crop health, and in the energy sector to oversee hazardous operations or to monitor oil pipelines.


All Economy Articles