Drone makers in India on cloud nine after import ban announcement

Indian drone makers are extremely elated with the Central government banning the import of drones subject to certain exceptions, said industry players.

According to them, the Centre has been announcing new policies that are enabling Make in India drones in a major way.

On Wednesday, the Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce, issued a notification banning import of drones, subject to some exceptions.

However, the government continued imports of components for making drones.

"It is a great move by the government. We are now getting calls from various companies on exploring opportunities. Now drone users/operators would have to deal with those having drone manufacturing facilities," Garuda Aerospace Founder and CEO Agnishwar Jayaprakash told IANS.

The city-based Drones-As-A-Service (DaaS) startup is putting up drone assembly units at Manesar in Haryana's Gurugram and Tamil Nadu's Hosur at an outlay of $3 million.

"Both the plants together will have a capacity to roll out about 60-70 drones per day," Jayaprakash said.

He said Garuda Aerospace will follow the automobile industry practice of sourcing assembled parts.

"Very encouraging news for the India drone ecosystem. With so many socially impactful use cases across the country, how long can we rely on borrowed technology and expertise?" Vipul Singh, Founder and CEO, Aarav Unmanned Systems, said.

"We see this import ban as a powerful step in making India self-reliant. And there is a huge potential for India to become a big exporter of drone technology in the near future. We are definitely on track to enable more technology creation in India and truly Make in India," he added.

Drone import is allowed by government entities, educational institutions recognised by Central or state government, government-recognised R&D entities for defence and security purposes and drone manufacturers for R&D purpose shall be allowed in CBU, SKD or CKD form subject to import authorisation issued by DGFT in consultation with concerned line ministries.

After liberalising the rules relating to drones in 2021, the government has given a big boost to the drone industry with the announcement of Kisan Drones in the Budget 2022-23.

The government has also announced a productivity linked incentive (PLI) scheme for the drone manufacturing industry.

An incentive of Rs 120 crore has been provided for Indian manufacturers of drone and drone components on the basis of their value addition in India.

The PLI is 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.

The incentive is spread over three financial years commencing from 2021-22.

Eligibility norm for micro, small, and medium enterprises (MSME) and startups is specified as Rs 2 crore of annual sales revenue for drone manufacturers and Rs 50 lakh of annual sales revenue for drone component manufacturers.

In case a manufacturer fails to meet the threshold for the eligible value addition for a particular financial year, the manufacturer will be allowed to claim the lost incentive in the subsequent year if they make up the shortfall in the subsequent year.

The incentive under the PLI scheme is applicable only on domestic value addition and will encourage manufacturers to reduce imports and go for higher capacity building and value addition in the sector, the government said.