The Government of India has introduced the Production-Linked Incentive (PLI) Scheme for drones and drone components to establish the country as a global leader in this emerging sector. The initiative is part of the larger PLI framework aimed at enhancing domestic manufacturing capabilities and reducing import dependency across critical industries. Announced in September 2021, the PLI scheme for drones underscores the government’s commitment to fostering innovation, promoting investment, and creating a robust ecosystem for the drone industry in India.
Key Highlights of the PLI Scheme
1. Financial Allocation:
The PLI scheme for drones is backed by a budget allocation of ₹120 crore over three years. This amount is nearly double the estimated size of the domestic drone manufacturing industry in 2020-21, reflecting the government’s aggressive push to scale up production and market share.
2. Incentive Structure:
• The scheme offers an incentive of 20% of the value addition made by manufacturers.
• The high rate of incentives ensures that even startups and smaller companies benefit significantly, fostering equitable growth.
• Value addition is calculated as the selling price of drones or components, excluding the cost of imported parts, highlighting a focus on indigenous production.
3. Eligibility and Focus:
• The scheme targets drone manufacturers, component producers, and companies working on innovative drone technologies.
• It prioritizes indigenization, encouraging the development of domestic supply chains for key components like motors, batteries, and sensors.
4. Simplified Norms:
• The eligibility threshold for the scheme is set at a modest ₹2 crore annual sales turnover for drone manufacturers and ₹50 lakh for component manufacturers, ensuring accessibility for startups.
• Companies with a sustained growth trajectory are eligible for incentives for three consecutive years.
Impact on the Drone Industry
1. Market Growth:
The PLI scheme is expected to catalyze a significant expansion of the Indian drone market. Industry estimates suggest that the sector could grow to ₹15,000 crore by 2026, driven by demand across agriculture, logistics, surveillance, and infrastructure sectors.
2. Employment Generation:
The initiative aims to create over 10,000 direct jobs in the drone industry and many more indirectly, boosting employment across manufacturing, services, and allied sectors.
3. Encouraging Startups:
The PLI scheme is tailored to attract startups, fostering innovation and entrepreneurship in the industry. With easier entry barriers, young companies can capitalize on the incentives to scale their operations and expand market reach.
4. Strategic Importance:
By promoting domestic manufacturing, the scheme aligns with India’s Aatmanirbhar Bharat (Self-Reliant India) vision. It reduces reliance on imports, especially for critical components, and positions India as a competitive player in the global drone market.
Government’s Broader Vision
The PLI scheme is part of a holistic approach to developing the drone ecosystem in India. Complementary initiatives include:
• Relaxed Drone Rules, 2021: Simplifying regulations to encourage investment and innovation.
• Drone Shakti Scheme: Supporting startups and promoting the use of drones-as-a-service (DrAAS).
• Skill Development Programs: Establishing training centers to create a pipeline of skilled drone pilots and technicians.
Challenges and Opportunities
While the PLI scheme has created a favorable environment for drone manufacturing, certain challenges persist:
• Technological Gaps: Indian manufacturers must compete with advanced technologies from global players.
• Supply Chain Dependencies: Developing a fully indigenous supply chain for critical components is crucial.
• Regulatory Adaptations: As the sector grows, regulatory frameworks must evolve to address privacy, security, and operational challenges.
Despite these challenges, the PLI scheme presents unprecedented opportunities for stakeholders in the drone industry. With sustained government support and private sector participation, India is well-positioned to emerge as a global hub for drone manufacturing and innovation.
Conclusion
The Production-Linked Incentive Scheme for drones is a landmark initiative that underscores India’s intent to lead in next-generation technologies. By focusing on indigenous manufacturing, fostering innovation, and creating a business-friendly environment, the scheme is set to transform the drone industry. It not only boosts economic growth but also strengthens India’s position as a global technology leader in an increasingly drone-dependent world.
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