A New Era Is Dawning for India’s Drone Industry

🔍Insights

Nitin Konde, Apoorva Bajj

Apr 3, 2024 — 4 min read

A New Era Is Dawning for India’s Drone Industry

Ever since drones first appeared on the scene, people all over the globe have been enamored with this new way of surveying the planet. Inspired by the rapid development of this industry, India is aiming to become the world's leading drone manufacturer by 2030. In addition to making the country more technologically advanced, this transition will reportedly add roughly 1.15 percent to the GDP and create five lakh employment in the next years, according to media sources. The use of drones has been hailed as a crucial component of the ecosystem surrounding Industry 4.0. The government's Production Linked Incentive (PLI) program, which was launched in 2021, is being requested by the drone sector to be expanded.

While speaking with the media recently, Indian Minister of State for Civil Aviation Gen. VK Singh (Retd.) predicted that the drone manufacturing industry's yearly sales turnover might increase from around Rs 60 crore in 2020-21 to around Rs 900 crore in 2024-25.

Boosting the Sector
Reasons to Elevate This Sector
Problems Impeding Expansion

Boosting the Sector

By announcing liberalized drone regulations in August 2021, the Indian government ushered the drone sector into what it called "an era of supernormal growth." Since then, the industry has skyrocketed. These rules simplified the red tape by doing away with security clearances during licensing and registration and cutting the number of documents and permissions needed from 25 to 5.

Adding more manure to foster the growth of this sector, the Ministry of Civil Aviation has implemented the following five measures—the Ease of Doing Business (Drone Rules 2021), financial incentives (PLI scheme), government procurement, export liberalization, and domestic industry promotion.

In September 2021, the ministry released the drone airspace map and a PLI scheme following the drone rules. In October 2021, the ministry released the UAS Traffic Management (UTM) policy framework. Drones flying up to 400 feet are now allowed across approximately 90% of Indian airspace according to a map released on September 24, 2021.

PLI has distributed Rs 30 crore so far; it is regarded as a spearhead for boosting the drone sector. The government launched the program with an incentive package of Rs 120 crore, to be distributed over three fiscal years at a rate of 20% of the value addition. A total of twelve drone manufacturers and eleven drone component manufacturers were chosen as PLI beneficiaries under the program.

Size of Drone Service Market in India for 2020 and 2021, With a Forecast Until 2030

Reasons to Elevate This Sector

Drones have many practical applications in many fields, including cinematography, building, defense, mining, telecommunications, oil and gas exploration, monitoring sites, aerial photography, and land surveys. They are also useful for keeping an eye on infrastructure like roads and highways. As technology advances and cost efficiencies rise, solutions like drone-facilitated last-mile deliveries and other support for retail, healthcare, logistics, and other sectors may soon become more commonplace in consumer market applications.

This can only happen in India if the country's drone industry grows. This calls for more expenditures in research and development, more local production to meet demand, and solutions that can handle both general-purpose and hyperlocal needs. Significant cost reductions will only occur in the industry after that. Businesses of all sizes, from large conglomerates in related industries to fledgling tech companies and micro, small, and medium enterprises (MSMEs)—can benefit from this industry-ecosystem-based approach. These businesses can manufacture components, create software applications, enterprise solutions, and counter-drone technology, and even design and assemble finished goods. Diversified product lines that are finally appealing to consumers will be the final result.

Problems Impeding Expansion

This industry is facing several obstacles that are preventing it from reaching its full potential, even though all of the bots have been correctly positioned. Access to necessary parts is one of the most significant challenges in this regard. As a result of the limited availability of these components in India, drone makers are forced to rely largely on suppliers from other countries. Components were exempt from the import embargo that the government imposed to encourage domestic drone production.

The local ecosystem is starting to see a lot of investment, and it will start to take shape in the next few years. India's largest drone manufacturer, IdeaForge, is collaborating with several suppliers to "indigenize" numerous drone subsystems. It is equally critical to set up testing facilities and cultivate a talent pool for piloting these UAVs. Inadequate oversight is a risk that the PLI system poses to the drone business. The sector is requesting a merger of production-linked and service-linked incentives in addition to a larger PLI system.