New drone PLI to focus on R D, manufacturing, may leave out testing

The original proposal was to provide incentives for testing, R&D and manufacturing. “The idea is to reduce the dependence on a certain country for parts that go into drone making. Hence, we are likely to decide on offering incentives for R&D and manufacturing and not on providing any incentive on testing," said an aviation ministry official, who did not want to be identified.

By “a certain country" the official meant China. The official added that the new incentive scheme is still “work in progress," as it is being discussed at various levels.

“The proposal is to have an incentive amount of ₹3,000 crore but the decision is yet to be taken. Also, the incentive will focus on civil drone industry and not on military," the official said.

Drone testing

Officials said drone testing will continue as before at various centres including at the premier agency National Test House (NTH), which has its main centre in Ghaziabad, and branches at Kolkata, Mumbai, Chennai, Ghaziabad, Jaipur, Guwahati and Varanasi. But the service will not attract an incentive.  

Also read: Will a new incentives package help India's drone industry lift off?

Mint first wrote on 19 September that the government is looking at a ₹3,000 crore scheme to help create a drone ecosystem in the country. The proposed amount is an 18x jump from the previous PLI scheme’s meagre ₹165-crore ($20 million) outlay, which the officials cited above said is in line with the on-ground impact and growth of domestic drone firms in the past three years.

Industry stakeholders agree a larger fiscal support is necessary. The previous scheme, announced in September 2021, only focused on domestic manufacturing, with a small outlay based on what was then a nascent industry.

An email sent to the aviation ministry on Monday did not elicit any response till press time.

Drones in defence

The government believes drones will play a major role not just in defence but also in the civil space and that too beyond recreational purposes. Hence, the government is working on a plan to become a leading manufacturer of drones to the world. Currently, China leads this space.

Also read: India’s drone market is soaring. Are these five stocks ready for lift-off?

It is estimated that by 2030, the local market is tipped to be worth $35 billion, with $12 billion coming from defence supplies, and $9 billion from commercial deals. Exports, meanwhile, could account for 16% of India’s drone economy by the end of this decade.

As per an EY-Ficci report, from $345 million in 2020 to $9.7 billion by 2025, is likely to see defence contracts contributing $4.5 billion, while exports would make for 5%.one