September 16 2021: The Indian Government has approved a  Production-Linked Incentive (PLI) scheme for drones and drone components.
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 super-normal growth in the upcoming drone sector.
The drones and drone components manufacturing industry may see an investment of over INR 5,000 crore over the next three years.  The annual sales turnover of the drone manufacturing industry may grow from INR 60 crore in 2020-21 fold to over Rs 900 crore (Rs 9 billion)  in FY 2023-24.  The drone manufacturing industry is expected to generate over 10,000 direct jobs over the next three years. .  It is expected to grow to over Rs 30,000 crore(Rs 300 billion) in next three years. The drone services industry is expected to generate over five lakh jobs in three years.
Drones offer benefits to almost all sectors of the economy – 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.      
India has the potential of becoming a global drone hub by 2030 says the government release.
TOP 15 FEATURES OF THE PLI SCHEME FOR DRONES

1. The total amount allocated for the PLI scheme for drones and drone components is INR 120 crore spread over three financial years.  This amount is nearly double the combined turnover of all domestic drone manufacturers in FY 2020-21. 
2. The incentive for a manufacturer of drones and drone components shall be as high as 20% of the value addition made by her.
3. 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.
4. 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.
5. 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.
6. The Government has agreed to fix the minimum value addition norm at 40% of net salesfor drones and drone components instead of 50%, another exceptional treatment given to the drone industry.  This will allow widening the number of beneficiaries.
7. The PLI scheme covers a wide variety of drone components:
   1. Airframe, propulsion systems(engine and electric), power systems, batteries and associated components, launch and recovery systems;
   2. Inertial Measurement Unit, Inertial Navigation System, flight control module, ground control station and associated components;
   3. Communications systems (radio frequency, transponders, satellite-based etc.)
   4. Cameras, sensors, spraying systems and related payload etc.;
   5. 'Detect and Avoid’ system, emergency recovery system, trackers etc. and other components critical for safety and security.
8. The list of eligible components may be expanded by the Government from time to time, as the drone technology evolves.
9. The Government has agreed to widen the coverage of the incentive scheme to include developers of drone-related IT products also.
10. The Government has kept the eligibility norm for MSME and startups in terms of annual sales turnover at a nominal level - INR 2 cr (for drones) and INR 50 lakhs (for drone components).  This will allow widening the number of beneficiaries.
11. Eligibility norm for non-MSME companies in terms of annual sales turnover has been kept at INR 4 crore (for drones) and INR 1 crore (for drone components).
12. 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 total annual outlay. This will allow widening the number of beneficiaries.

1. 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.

Comments Swapnik Jakkampudi, Co-Founder, Skye Air Mobility  “At a time when many industries, from hospitality & tourism to retail shopping have come to a standstill and job losses on a rise, Drone sector is one such sector that has been consistently picking up and creating jobs.
Drone sales and popularity have continued to increase in India with the support of the liberalised rules. Application of drones will soon cuts across various sectors construction, delivery, law enforcement, media and entertainment, precision agriculture, surveying and mapping, and inspection and monitoring.
Not just commercial but today various examples of drones in development projects show the possibilities of using them in the field of humanitarian aid and environmental protection. The PLI scheme along with the liberalised drone rules, 2021 issued by the government on 25th August 2021 will help realise this growth potential.