Representative image.
Buoyed by the scorching pace of growth in domestic drone manufacturing, the government is looking to substantially increase the outlay of the production-linked incentive (PLI) scheme for the sector. The PLI scheme was introduced last year with an outlay of Rs 120 crore per annum for three years, which the industry expects to be raised to Rs 500 crore.
Amber Dubey, Joint Secretary with Ministry of Civil Aviation, said the ministry is considering approaching the Committee of Secretaries to raise the PLI funds, given the mammoth growth in the industry’s turnover. “Even on a low base, the growth has far exceeded every parameter which has been set in the PLI scheme,” Dubey told Moneycontrol.
From less than Rs 70 crore before the scheme was announced, the turnover increased more than fourfold to Rs 319 crore in fiscal 2021-22, much higher than the scheme’s target of Rs 200 crore. “Our earlier projections don’t hold anymore, and happily so. We are in process of preparing new growth estimates in consultation with drone industry stakeholders,” Dubey said.
The new targets
For fiscal 2023 the government has set a target of Rs 400 crore turnover, but looking at the growth trajectory it is now estimated to hit Rs 700 crore. The turnover is likely to touch the Rs 1,500 crore mark in fiscal 2024, according to the estimates.
“The main issue with such high growth is to maintain the momentum. For this momentum to sustain, a commensurate enhancement in the scheme’s outlay is desirable,” Dubey said.
The scheme
The Centre introduced the scheme in September last year and chose 23 companies to take part in it. The target-driven scheme is meant to provide production incentives for GST-billed products. It works on the concept of domestic value addition achieved in the manufacturing of a fully built drone.
Value addition
While the scheme mandates over 40 percent of value addition, the industry has achieved 66 percent in 2021-22. “This is a key area, we want to increase localisation of components and raise the domestic value addition in the finished drone,” Dubey said.
At present, India has banned imports of foreign manufactured drones. However, it allows imports of critical parts. “It is expected to be a niche sector that is expected to attain domestic self-sufficiency in the shortest time,” Dubey added.
Multiplier effect
“There is a growth multiplier effect of this sector in terms of investments and employment generation,” Dubey said, adding: “The estimated growth multiplier is at six times, thereby, one job created in the sector generates six additional jobs in related fields. Similar is the effect on investments.”
The scheme was expected to trigger investments in the sector of about Rs 5,000 crore and generate 10,000 jobs.
Production to procurement
At present, 14 central ministries as well as state governments and private ventures are the customers of these systems. “Agriculture, defence, security forces, mining, mapping, disaster management and governance are amongst the top users of drones,” he said.
Going forward, it is expected that a procurement support or demand generation mechanism will be introduced. “Real-time project monitoring is emerging as a massive use-case. In all, government agencies and private sector have maintained a healthy demand environment.”
Export potential
Indian drone companies have started making their presence felt in global drone expos and conferences. Though the current export orders are small and exploratory in nature, they are likely to expand significantly in the next two to three years, Dubey said.
“Indian drone companies are developing unique solutions in agriculture, mapping, surveillance and defence etc. that have universal applications. The Ministry of External Affairs and Directorate General of Foreign Trade have offered full support for facilitating drone exports,” he added.
Currently, India has over 120 companies engaged in drone and drone components manufacturing.
