New Drone Incentives to Boost Domestic Manufacturing

January 7, 2025

The Government of India is set to unveil a new Production-Linked Incentive (PLI) scheme aimed at encouraging a self-sustaining drone ecosystem. This initiative is expected to feature an allocation of over ₹500 crore in the upcoming Budget. The scheme will succeed an earlier version that provided ₹120 crore for domestic drone manufacturing from 2021 to 2022. The new incentives aim to enhance local production and reduce dependency on imports, which currently account for 50-60% of drone parts used in India.

Overview of the New PLI Scheme

The new PLI scheme will offer incentives as a predetermined percentage of the total sale amount of drones and their components. It aims to promote local manufacturing while expanding the scope to include services like drone leasing and software development. The initiative is designed to stimulate innovation across the entire drone value chain.

Objectives of the PLI 2.0

The primary objective of PLI 2.0 is to increase localisation levels of drone components to approximately 30% of the total value. This initiative will encourage local manufacturers to develop and produce essential drone parts domestically. By doing so, the government seeks to reverse the trend of high import dependency in the drone sector.

Key Areas of Focus

The new scheme will focus on several critical areas, including:

Drone Manufacturing – Incentives will be provided for the production of drones and their components.
Drone Leasing – The scheme will promote services related to leasing drones, making them more accessible to various sectors.
Software Development – It will support domestic coding and sale of software for operating Unmanned Aircraft Systems (UAS).
Counter-Drone Systems – The inclusion of anti-drone technologies will enhance security measures.

Impact on the Drone Ecosystem

Industry experts believe that the new PLI scheme will boost the growth of India’s drone ecosystem. The government’s previous initiatives, such as the liberalised Drone Rules and initial PLI scheme, have already accelerated this growth. By encouraging innovation and enabling start-ups, India is positioning itself as an emerging leader in drone technology.

Demand Across Various Sectors

The demand for drones is projected to grow in sectors such as agriculture, infrastructure development, and surveillance. Industry insiders have brought into light the importance of a dedicated focus on the drone ecosystem in the upcoming Budget. This focus should encompass not only drones but also components and software to ensure comprehensive development.

PLI – Production-Linked Incentive scheme for manufacturing.
UAS – Unmanned Aircraft Systems, used for various applications.
DFI – Drone Federation India, representing industry interests.
Localisation – Increasing domestic production to reduce imports.
Anti-Drone Systems – Technologies designed to counteract drone threats.

Future Prospects of Drone Technology

The future of drone technology in India looks promising, with government support and growing industry interest. As the PLI 2.0 scheme rolls out, it is expected to catalyse further innovation and attract investments in high-value manufacturing. This will not only enhance self-reliance but also position India as a competitive player in the global drone market.

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