INDIA. Mumbai: The Union Civil Aviation Ministry has decided to give the incentive worth Rs 120 crore in the next three years under the Production-Linked Incentive (PLI) scheme for drones and drone components manufacturing industry.
Briefing media on Thursday, the Union Minister of Civil Aviation Jyotiraditya M. Scindia said that as part of the Aatmanirbhar Bharat(self-reliant India) initiative the Union Government will be giving Rs 120 crore to the manufacturers of drones and drone components. This amount is 1.5 times the combined size of the manufacturing drone sector, the official statement said.
Over the next three years, estimated investment worth Rs.5,000 crore for manufacturing sector drones will be done and in turn, it will bring a turnover of Rs 900 crore and generate over 10,000 jobs. “the objective is to establish India as a global drone hub by 2030 and Ministry of Civil Aviation is committed to facilitate industry, service delivery and consumers in achieving the aforesaid target”, Scindia stated.
Main features of the PLI scheme for Drones 2021
The PLI Scheme for Drones 2021 has many features. The amount of Rs 120 crore will be spread over three financial years. This amount is nearly double the combined turnover of all domestic drone manufacturers in Financial Year 2020-21.
The incentive for a manufacturer of drones and drone components shall be as high as 20 % cent of the value addition made by the industry. The value addition shall be calculated as the annual sales revenue from drones and drone components (net of GST) minus the purchase cost (net of GST) of drone and drone components.
The Government has agreed to keep the PLI rate constant at 20% for all three years, an exceptional treatment given only to the drone industry. In PLI schemes for other sectors, the PLI rate reduces every year. The proposed tenure of the PLI scheme is three years starting in FY 2021-22. The PLI scheme will be extended or redrafted after studying its impact in consultation with the industry.
The Government has agreed to fix the minimum value addition norm at 40% of net sales for drones and drone components instead of 50%, another exceptional treatment given to the drone industry. This will allow widening the number of beneficiaries.
The PLI scheme covers a wide variety of drone components: Airframe, propulsion systems(engine and electric), power systems, batteries and associated components, launch and recovery systems, Inertial Measurement Unit, Inertial Navigation System, flight control module, ground control station, and associated components, Communications systems (radiofrequency, transponders, satellite-based, etc.), Cameras, sensors, spraying systems, and related payload, etc, Detect and Avoid’ system, emergency recovery system, trackers, etc. and other components critical for safety and security.
The list of eligible components may be expanded by the Government from time to time, as drone technology evolves. The Government has agreed to widen the coverage of the incentive scheme to include developers of drone-related IT products also. The Government has kept the eligibility norm for Micro, Small & Medium Enterprises (MSME) and startups in terms of annual sales turnover at a nominal level – Rs.2 crore (for drones) and Rs.50 lakh (for drone components). This will allow widening the number of beneficiaries.
The eligibility norm for non-MSME companies in terms of annual sales turnover has been kept at Rs. 4 crore (for drones) and Rs. 01crore (for drone components). The incentive payable to a manufacturer of drones and drone components shall be simply one-fifth of her value addition.
PLI for a manufacturer shall be capped at 25% of the total annual outlay. This will allow widening the number of beneficiaries. In case a manufacturer fails to meet the threshold for the eligible value addition for a particular financial year, she will be allowed to claim the lost incentive in the subsequent year if she makes up the shortfall in the subsequent year.
The estimated payout schedule
Drones are unmanned aerial vehicles (UAVs) or unmanned aircraft systems (UASes). Essentially, it is a flying robot that can be remotely controlled or fly autonomously through software-controlled flight plans in their embedded systems, working in conjunction with onboard sensors and GPS. In the recent past, UAVs were most often associated with the military, where they were used initially for anti-aircraft target practice, intelligence gathering, and then, more controversially, as weapons platforms.
However, drones are now also used in a wide range of civilian roles ranging from search and rescue, surveillance, traffic monitoring, weather monitoring, and fire fighting, to personal drones and business drone-based photography, as well as videography, agriculture, and even delivery services.
Drones offer tremendous benefits to almost all sectors of the economy. These include– agriculture, mining, infrastructure, surveillance, emergency response, transportation, geo-spatial mapping, defence, and law enforcement to name a few. Drones can be significant creators of employment and economic growth due to their reach, versatility, and ease of use, especially in India’s remote and inaccessible areas.
Given its traditional strengths in innovation, information technology, frugal engineering, and its huge domestic demand, India has the potential of becoming a global drone hubby 2030. The PLI scheme comes as a follow-through of the liberalized Drone Rules, 2021 released by the Central Government on 25 August 2021. The PLI scheme and new drone rules are intended to catalyze super-normal growth in the upcoming drone sector.
Likely impact of Drone initiatives
Due to the new rules and the incentive scheme, the drones, and drone components manufacturing industry may see an investment of over Rs.5,000 crore over the next three years. The annual sales turnover of the drone manufacturing industry may grow from Rs. 60 crore in 2020-21 fold to over Rs. 900 crore in Financial Year 2023-24. The drone manufacturing industry is expected to generate over 10,000 direct jobs over the next three years. The drone services industry (operations, logistics, data processing, traffic management, etc.) is far bigger in scale. It is expected to grow to over Rs. 30,000 crore in the next three years. The drone services industry is expected to generate over five lakh jobs in three years.
