News Update

Production linked incentive of INR 120 crore is provided for Indian manufacturers of drone and drone components

Feb 2022 | No Comment

The Production-Linked Incentive (PLI) Scheme for drones and drone components has been notified on Sept. 30,  2021 to push the production of drones.

The details of this scheme are as follows:

(i) An incentive of INR 120 crore (approximately $16 million) has been provided for Indian manufacturers of drone and drone components on the basis of their value addition in India. The value addition by a manufacturer will 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 incentive shall be provided over three financial years commencing from 2021-22.

(ii) The PLI that can be claimed by a manufacturer is 20% of the value addition by such manufacturer. The PLI rate is constant at 20% for all three years.

(iii) Minimum value addition is specified as 40% of net sales

(iv) Eligibility norm for Micro, Small and Medium Enterprises (MSME) and startups is specified as INR 2 crore (approximately $ 266,000) of annual sales revenue for drone manufacturers and INR 50 lakhs (approximately $67,000) of annual sales revenue for drone component manufacturers.

(v) PLI for a beneficiary is capped at 25% of the total annual outlay to allow widening of the number of beneficiaries.

(vi) In case a manufacturer fails to meet the threshold for the eligible value addition for a particular financial year, the manufacturer will be allowed to claim the lost incentive in the subsequent year if the manufacturer makes up the shortfall in the subsequent year. The liberalized Drones Rules, 2021 notified on 25 August 2021 provide the regulatory framework for owning and operation of drones. These rules cover various aspects like type certification, registration and operation of drones, airspace restrictions, research, development and testing of drones, training and licensing, offences and penalties etc.

The salient features of the Drone Rules, 2021 are as follows:

(i) Every drone, except for those meant for research, development and testing purposes, is required to be registered and should have a Unique Identification Number (UIN).

(ii) An airspace map of the country segregating the entire airspace into green, yellow and red zones is to be displayed on the digital sky platform. Operation of drones in yellow and red zones is subject to the approval of Airports Authority of India (AAI) and Central Government respectively. No approval is however required for operation of drones in green zones which means the airspace up to a vertical distance of 400 feet.

(iii) The State Government, the Union Territory Administration and Law enforcement agencies have been empowered under the Rules to declare a temporary red zone for a specified period.

(iv) Drones are required to have the necessary type certification issued by Directorate General of Civil Aviation (DGCA). No type certification is however required in case of nano drones (up to 250 grams all-up weight) and model drones made for research and recreation purpose.

(v) Drone operators are required to furnish the necessary personal details including their Indian passport number etc. for issuance of any registration or license.

(vi) A remote pilot license issued by DGCA is mandatory for operating any drone, except for drones up to 2 kg weight (used for non-commercial purposes) and drones weighing less than 250 grams.

(vii) Authorization of Remote Pilot Training Organizations (RPTO) and issuance of remote pilot licenses will be done by DGCA within specified time limits.

(viii) The all-up weight of drones covered under these Rules has been increased from 300 kg to 500 kg

(ix) Number of forms have been reduced from 25 to 5 and types of fees have been reduced from 72 to 4.

(x) A Digital Sky Platform is to be developed as a user-friendly online single window system for all drone related approvals and authorizations. The liberalized provisions of the Drone Rules, 2021 as well as the incentives provided under the PLI Scheme for drones and drone components will promote the manufacturing of drones in the country.

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