Can new guidelines on drone operations lift India's drone start-ups?

India has fewer start-ups in the drone technology space than the US and China; it also lags most other economies in funding

The government last month announced the new draft guidelines for drone operations in India. The Drone Rules, 2021, are a major revision to the drone policy in the country, which has been in limbo until now. While the government has made revisions to drone policy every year since 2018, it has not formalised any guidelines until now. Meanwhile, start-ups in the sector have multiplied.

Last year, when the Tamil Nadu government was struggling to sanitise areas, they had to rely on a Chennai-based drone start-up, Garuda, to disinfect hospitals. In the following months, Garuda was employed by various other states to carry out the same task.

Maharashtra also announced that it would be experimenting with the delivery of medicines in rural areas using drones.

While commercial drone operations have increased manifold since India first launched its drone policy in 2014—the government has been using drones for mapping and banks have been relying on the technology for insurance—the sector has been constricted given the restrictions placed out by the government and red-tape in the sector. In one instance, while beyond visual line of sight operations are essential for commercial drone operations, the Indian rules did not allow companies to operate drones in BVLOS mode.

An analysis of Tracxn data shows how far India lags developed countries in this emerging sector. The US, the UK and China have more drone start-ups. While India has 157 companies running drone operations, China has 204 start-ups in the space, and the UK has 192 start-ups. The US, which is the breeding ground for most innovations, has five times more start-ups than India.

Although Australia and Israel have fewer start-ups than India, data indicates that they outrank the country in terms of funding. Funding data for the top 10 start-ups reveals that India is placed at the bottom of the table. The top 10 drone companies in India have been able to garner average funding of $5.1 million. Australian start-ups have had average funding of $7.7 million, followed by the UK at $9.6 million.

Israel may only have 69 start-ups in the space, but their average funding size is $33.5 million. The funding size of Chinese start-ups is $107 million, whereas the top 10 US start-ups have garnered $243.6 million of funding.

The new draft drone rules, 2021, seem to address the lacunae. By relaxing norms in the registration of drones and removing the need for licences in certain categories, the government plans to open the sector for more innovation.

However, policy in other areas needs to catch up too. The new geospatial policy, released in February this year, requires freeing specific drone regulations and a liberal approach in AR/VR space. Similarly, while the government is allowing operations of drones in the country, the import of drones and drone components will still be controlled by the Director-General of Foreign Trade. As India does not have sizeable domestic drone manufacturing firms, most are imported and assembled in India. Stricter norms on imports shall mean more restrictions for the sector.