India prohibiting drone imports effectively blocks a giant in China

India banned the import of drones, a move that effectively blocks an emerging market for China’s SZ DJI Technology Co., the world’s top dronemaker, and encourages a nascent local industry to ramp up production.

Import of some drone components will be allowed without any approval, India’s Directorate General of Foreign Trade said in an order late on Wednesday. Drones used for research and development, defense, and security purposes will be exempt from the ban, the government said.

India is among several countries across the world that are trying to look for alternatives to China for products and components, as the pandemic and global trade tensions amplify a need to diversify supply chain and limit risk. India and China are engaged in a protracted standoff along their disputed Himalayan border.

Amid the continuing disputes between China and U.S., drones have taken center stage as concerns surface that Shenzhen-based DJI may be relaying some sensitive data to Chinese intelligence agencies on everything from critical infrastructure like bridges and dams, as well as personal information such as heart rates and facial recognition.

India last year relaxed rules on the use of drones to make it easier to acquire licenses and allowed heavier payloads so the devices can potentially be used as unmanned flying taxis. India will offer Rs 120 crore ($16 million) of incentives for drone makers under Prime Minister Narendra Modi’s $20 billion plan to lure the world’s biggest brands to make their products in India and export them to the world.

Hovering drones have become immensely popular in Bollywood-style Indian weddings, holidays to exotic places, and in the filming of movies, even though they were illegal just a few years ago. After Covid started its deadly streak in India, oil refiner Bharat Petroleum Corp. began flying drones over acres of land to record behavior of workers to ensure they were following social-distancing rules. In March 2020, budget carrier SpiceJet Ltd. said it planned to use drones for the delivery of medical and essential supplies along with e-commerce products.

Rattanindia Enterprises Ltd., a local dronemaker, said India’s move will help in making the South Asian nation a drone manufacturing hub. The new rules will allow better efficiency in supply chain operations, inventory and fund management, the company said in a statement Thursday.

The pandemic has intensified a shift to automated delivery for meals, groceries, medical supplies and other essentials, boosting the drone industry. Autonomous-vehicle companies, delivery startups and drone operators have all touted the benefits of contactless systems.