Jyotiraditya M. Scindia announces Rs 120 crore incentives for drone sector

Jyotiraditya M. Scindia, Union Minister of Civil Aviation said that under the PLI scheme, incentives of Rs 120 crore will be given in the next three years. This amount is 1.5 times the combined size of the manufacturing drone sector. Over a period of three years, an estimated investment worth Rs 5,000 crore for manufacturing sector drones will be done which in turn will bring a turnover of Rs 900 crore, and 10,000 job opportunities will be created.

Delhi: Jyotiraditya M. Scindia, Union Minister of Civil Aviation said that under the PLI scheme, incentives of Rs 120 crore will be given in the next three years.

The Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing proposes a financial incentive to boost domestic manufacturing and attract large investments in the electronics value chain including mobile phones, electronic components, and ATMP units.

This amount is 1.5 times the combined size of the manufacturing drone sector. Over a period of three years, an estimated investment worth Rs 5,000 crore for manufacturing sector drones will be done which in turn will bring a turnover of Rs 900 crore, and 10,000 job opportunities will be created. He further added that the objective is to establish India as a global drone hub by 2030 and the Ministry of Civil Aviation is committed to facilitating industry, service delivery, and consumers in achieving the aforesaid target.

Here are the Special features of the PLI Scheme for Drones, 2021

• The total amount allocated for the PLI scheme for drones and drone components is Rs 120 crores spread over three financial years. This amount is nearly double the combined turnover of all domestic drone manufacturers in FY 2020-21.
• The incentive for a manufacturer of drones and drone components shall be as high as 20% of the value addition made by her.
• The value addition shall be 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 Government has agreed to keep the PLI rate constant at 20% for all three years, an exceptional treatment given only to the drone industry. In PLI schemes for other sectors, the PLI rate reduces every year.
• The proposed tenure of the PLI scheme is three years starting in FY 2021-22. The PLI scheme will be extended or redrafted after studying its impact in consultation with the industry.
• The Government has agreed to fix the minimum value addition norm at 40% of net sales for drones and drone components instead of 50%, another exceptional treatment given to the drone industry. This will allow widening the number of beneficiaries.

PLI for a manufacturer shall be capped at 25% of the total annual outlay. This will allow widening the number of beneficiaries.

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

Drones offer tremendous benefits to almost all sectors of the economy. These include– agriculture, mining, infrastructure, surveillance, emergency response, transportation, geo-spatial mapping, defense, and law enforcement to name a few.

Drones can be significant creators of employment and economic growth due to their reach, versatility, and ease of use, especially in India’s remote and inaccessible areas. Given its traditional strengths in innovation, information technology, frugal engineering, and its huge domestic demand, India has the potential of becoming a global drone hub by 2030.

The PLI scheme comes as a follow-through of the liberalisedDrone Rules, 2021 released by the Central Government on 25 August 2021. The PLI scheme and new drone rules are intended to catalyse super-normal growth in the upcoming drone sector.

Due to the PLI Scheme, the drones and drone components manufacturing industry may see an investment of over INR 5,000 crore over the next three years. The annual sales turnover of the drone manufacturing industry may grow from Rs 60 crores in 2020-21 fold to over Rs 900 crore in FY 2023-24.

The drone manufacturing industry is expected to generate over 10,000 direct jobs over the next three years. The drone services industry (operations, logistics, data processing, traffic management, etc.) is far bigger in scale. It is expected to grow to over Rs 30,000 crore in the next three years. The drone services industry is expected to generate over five lakh jobs in three years.