India has added 34% more drone start-ups since new August guidelines

Average funding of top 10 start-ups has increased 10 per cent to $5.6 million

On February 9, the director-general of foreign trade notified a ban on the import of drones with immediate effect.

"Import policy of drones in CBU (completely built-up)/CKD (completely knocked down)/SKD (semi-knocked down) form under HS Code 8806 is "Prohibited' with exceptions provided for R&D Defence and Security purposes. Import of drone components shall be "Free". This shall come into force with immediate effect," the notification stated.

While the government had notified a preference for made-in-India drones in the Drone Rules published in August last year, the latest announcement further solidifies its stand.

In the August rules, the government had said that it shall give preference to make in India drones for certification and that import shall be regulated by "director general of foreign trade or any other entity authorised by the Central Government."

The ban also follows the government announcement of a production linked incentive scheme for drone manufacturing of Rs 120 crore to generate Rs 5,000 crore investment in drone manufacturing and add 10,000 jobs in the sector.

The government has been moving fast to create an indigenous industry for drones. A Business Standard analysis shows that there has been a spurt in drone start-ups in the country since August last year.

The number of drone start-ups in India has increased 34.4 per cent, Tracxn data shows. While in August last year, India had 157 drone start-ups, the number of drone start-ups on February 8 were 211.

The United States, which has data available for the comparable period, witnessed a 9.7 per cent increase. Germany saw a 6.7 per cent surge in the number of drone start-ups.

There was a 10 per cent increase in the average funding size of the top 10 Indian start-ups. In the US, however, funding increased by 15.2 per cent.

Even though India is growing fast, it still dwarfs the US and other economies in terms of funding.

The US has four times more drone start-ups compared to India. While the average funding for a top Indian start-up was $5.6 million, the average funding size was 50-times more at $280.7 million in the US. Even in PPP terms, the average funding for the US was 13-times more than the Indian counterpart. The average funding for the top 10 start-ups in China, in absolute terms, was nearly 20-times higher than in India.