India is providing 120 Cr to incentivize domestic drone manufacturing

The Indian government approved on Wednesday, 120 billion rupees, spread over the next three fiscal years, for production-linked incentives (PLI) for the manufacture of drones and their components in the country.

Industry experts say the move could be a major shot in the arm for the local drone industry, especially if seen alongside the very liberal one new drone rules… It could be a major driver for the Indian market, where so far domestic drone companies have largely relied on importing a number of components from China to build their drones.

The incentive for a manufacturer of drones and drone components should amount to up to 20% of its added value. The increase in value is calculated as the annual revenue from drones and drone components (excluding VAT) minus the acquisition costs (excluding VAT) of drones and drone components.

The government has kept the PLI rate constant at 20% for all three years, which is unique in the drone industry. In the case of PLI systems for other sectors, the rate decreases every year.

The proposed duration of the PLI program is three years from the 2021-22 financial year and will be extended or reformulated after reviewing its effects in consultation with the industry.

“The program will bring tremendous economic multipliers to India, where the drone and drone component manufacturing sector is expected to invest over INR 5,000 and create 10,000 direct jobs over 3 years,” Civil Aviation Minister Jyotiraditya Scindia said in a statement.

“The annual turnover of the drone manufacturing industry could increase from 60 billion rupees in the period 2020-21 to over 900 billion rupees in FY 2023-24,” said the civil aviation ministry in a opinion

The minimum value added norm has been set at 40% of net sales for drones and drone components instead of 50%, another exceptional treatment for the drone industry. Industry experts say this could allow more actors to participate in the program.

“The PLI program will encourage all drone and component manufacturers to come to India to take advantage of the low-cost manufacturing environment and even the huge talent pool we have here,” said Ankit Mehta, co-founder of ideaForge, one of India’s largest drone manufacturers …

Eligible are MSMEs and startups with an annual turnover of Rs 2 crore (for drones) and Rs 50 lakhs (for drone components). For non-MSME companies, annual sales were kept at Rs 4 billion (for drones) and Rs 1 billion (for drone components).