New PLI scheme for drone ecosystem likely in Budget

The Centre is expected to announce a new version of a PLI (Production-Linked Incentive) scheme to develop a self-sustaining drone ecosystem in the country, industry insiders told businessline.

Accordingly, a new PLI scheme with an outlay of over ₹500 crore is expected to feature in the Budget. It will succeed an earlier version of the scheme, which provided an incentive of ₹120 crore for domestic manufacturing of drones and drone components based on their value addition.

The incentive was spread over three financial years, from 2021 to 2022. It intended to promote domestic drone manufacturing as well as to reduce dependence on imports.

Notably, the new scheme, while retaining incentives to locally manufacture drones and their components, also provides for funds to promote a host of other services. These services include drone leasing as well as domestic coding and sale of software used for operating Unmanned Aircraft Systems (UAS).

Besides, expanding the scope of PLI 2.0 to include critical areas like leasing, coding and anti-drone systems,, will drive innovation across the value chain, incentivise indigenous development and attract investments into high-value manufacturing and cutting-edge technologies, industry insiders said.

The new incentives will be provided as a predetermined percentage of the total sale amount of drones, value addition and localised parts.

However, a major thrust will be given to incentivise local manufacturers to develop and produce drone components domestically.

Currently, 50-60 per cent of drone parts used in India are imported; the new scheme seeks to reverse this trend by offering incentives to increase the localisation levels to about 30 per cent of the total value.

At present, nearly 300 drone manufacturers in the country make various kinds of UAS for various utilities, spanning from defence to agriculture.

Growing demand

Industry estimates a healthy demand for drones in various sectors including agriculture, infrastructure development and surveillance.

“As we approach the Budget, we strongly recommend the introduction of PLI 2.0 with a dedicated focus on the drone ecosystem. This should encompass not just drones but also drone components, drone software and counter-drone systems to ensure a holistic approach to building self-reliance and global competitiveness,” said Smit Shah, President, Drone Federation India (DFI).

“Government initiatives such as the liberalised ‘Drone Rules,’ the initial PLI scheme for drones, and efforts to promote drone usage across sectors like agriculture, healthcare, and defence, have significantly accelerated the growth of India’s drone ecosystem. These policies have fostered innovation, enabled start-ups and manufacturers to scale, and made India an emerging leader in drone technology.”