Indian drone startups buckle up for increased competition, investments

Introduction of drone policy sets the stage for global players to enter the market, while giving direction to the local industry

So finally, the much-awaited drone policy has been put into place. With this, the so far dormant segment has now opened up a whole new world of opportunities as well as challenges.

Opportunities, because it opens up doors to different segments that offer a variety of applications which were hitherto unthinkable. Challenges, as it uncovers the market to global drone makers and providers thus bringing in intense competition for domestic firms. It also requires them to burn cash in the short term to meet new technological requirements such as integrating features like obstacle avoidance and barometers, among others.

But as a whole, most of the local startups operating in the space believe that India’s new regulation for the use of Unmanned Aerial Vehicles (UAVs), popularly known as drones, is expected to provide a big impetus to the sector.

“Even though India already had a drone ecosystem, it has had to do only with the government -- either defence or large infrastructure projects. But now, there’s going to be a need to improve the scope of application. This will bring in a lot of competition for us, whether for good or bad,” says Pradeep Palelli, founder of Hyderabad-based drone maker, Thanos Technologies.

Like any other fast-emerging sector, be it e-commerce, ride-hailing, AI or blockchain, Indian firms will need to make their products globally competitive if they want to win here. So far, a lot of innovation has happened in India’s drone ecosystem, but it runs the risk of being done in a silo, not at par with what the rest of the world has to offer.

Palelli says this isn’t the case in certain scenarios, such as agricultural uses of drones, in which Thanos plays a large role. In terms of specifications, Palelli says while the drones that Thanos builds might not be offering the best applications when compared with that of the leading drones in this space, they are nevertheless quite close. The reason, he says, is Thanos often ends up using imported components due to a lack of a manufacturing ecosystem in India, meaning the company uses some of the same parts that their competitors do.

However, what Indian drone companies have really excelled in is doing design in-house. Several aviation experts have now started drone companies, and are pushing the boundaries of what these machines can do, making them comparable to any global offering. Dr Kota Harinarayana, a former DRDO scientist who led the designing of India’s Light Combat Aircraft (Tejas), also believes in the power of drones and has, together with a few colleagues, started General Aeronautics, a drone startup that is incubated out of the Indian Institute of Science (IISc) in Bengaluru.

General Aeronautics has even done some of the design work for a high-lift-capable unmanned helicopter, but says, owing to the expense of building a prototype (Rs 100-150 million) it has not actually got to it just yet. However, with the policy in place, Harinarayana and his partners expect that it won’t be too much of a hassle to raise the funds now for taking up the project.

“We have done some design work, but these vehicles would cost around Rs 100-150 million each to make. which a startup like ours can’t afford. But we are looking for someone to fund us,” said Harinarayana.

One of the main reasons the domestic drone startups have been working largely under the radar so far is the lack of investment into the space. Investors have been wary of backing players in a sector that did not have any clarity on the regulation front. The few players who did get some bit of financial backing, are largely in the defence and surveillance space.

But this is changing quickly. In the time since the drone policy came out, Vipul Singh, co-founder and director of Aarav Unmanned Systems, a drone startup, says investors they had spoken to in the past have started reaching out to the company, seeking their plans to raise money.

“We couldn’t raise investments because they were not clear in which direction the market was going. Now, the overall perception of investors has changed in the last one week; it was immediate. Even globally, it is now known that India has an ecosystem and there’s a clear-cut regulation for drones here,” said Singh, an aerospace engineer who co-founded Aarav with two others in 2013.

Moreover, the Drone Policy finally gives startups and even global giants like Uber to think of revolutionary ideas such as drone taxis, delivery drones for e-commerce and even medical use, even if it does not allow them right now. 

The policy, experts and players in the industry say, is the stepping stone for an explosion of private sector industries to adopt as well as come up with new ways of using drones.