Government Approves PLI Scheme For Drones And Drone Components

Taking another step towards realising our collective vision of an Atma Nirbhar Bharat, the government has approved the production-linked incentive (PLI) scheme for drones and drone components.

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 hub by 2030.

The PLI scheme comes as a follow-through of the liberalised Drone Rules, 2021 released by the Central Government on 25 August 2021. The PLI scheme and new drone rules are intended to catalyse supernormal growth in the upcoming drone sector.

Thanks 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 (FY) 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 next three years. The drone services industry is expected to generate over five lakh jobs in three years.

According to the PLI scheme for drones, the total amount allocated for the PLI scheme for drones and drone components is Rs 120 crore spread over three financial years. This amount is nearly double the combined turnover of all domestic drone manufacturers in FY 2020-21.

The incentive for a manufacturer of drones and drone components shall be as high as 20 per cent of the value addition made by her.

The value addition shall be calculated as the annual sales revenue from drones and drone components (net of goods and services tax or 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 per cent 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 per cent of net sales for drones and drone components instead of 50 per cent, another exceptional treatment given to the drone industry. This will allow widening of a number of beneficiaries.

The PLI scheme covers a wide variety of drone components including airframe, propulsion systems (engine and electric), power systems, batteries and associated components, launch and recovery systems.

Besides, Inertial Measurement Unit, Inertial Navigation System, flight control module, ground control station and associated components, communications systems, cameras, sensors, spraying systems and related payload.