Centre To Launch INR 2,000 Cr Drone Tech Incentive Scheme

The Centre reportedly plans to launch an INR 2,000 Cr ($234 Mn) incentive programme to boost drone manufacturing in the country. 

As per Reuters, the incentive scheme will span a period of three years and will cover aspects such as manufacturing of drones, components, software, counter drone systems, and allied services. 

The initiative, which will be undertaken under the aegis of the civil aviation ministry (MCA), has been envisaged to the country’s reliance on imported components and counter Pakistan’s drone programme built on support from China and Turkey.

The new drone incentive scheme will reportedly aim to localise the production of at least 40% of key drone components in India by the end of fiscal year 2027-28 (FY28).

Sources reportedly said that the government has also planned additional incentives for drone manufacturers that procure parts from within the country. Additionally, the Small Industries Development Bank of India (SIDBI) will be tasked with offering “cheap loans” for working capital requirements and research and development (R&D) needs of drone tech firms under the potential scheme.

It is pertinent to note that this is the second such initiative launched by the Centre for the homegrown drone tech ecosystem. In 2021, the government introduced the production-linked-incentive (PLI) scheme for the drone sector with a total outlay of INR 120 Cr. The tenure of this PLI initiative ended last year. 

Subsequently in October last year, the then civil aviation secretary Vumlunmang Vualnam hinted that the government was planning to introduce a new PLI scheme to boost the production of drones in the country. However, the recent India-Pakistan conflict is said to have exacerbated the move to roll out the scheme. 

Besides, the Indian authorities also want to trim their dependence on other countries like China and Israel for drone manufacturing in military and defence use. 

India’s Drone Tech Ecosystem

India’s drone startups showed their mettle in the recent Indo-Pak conflict. As per the government, drones made by startups like IG Drones, Alpha Design Technologies and Paras Defence & Space Technologies played a key role in India’s retaliation to Pakistan’s military activities. 

In January, IG Drones even bagged a contract from the Army to deliver domestically built VTOL (vertical take-off and landing) and FPV (first-person view) drones. Homegrown defence tech startup Tonobo also supplied thermal imaging kits for air defence guns to the Army during Operation Sindoor.

Then, there are players like DroneAcharya and ideaForge that have also bagged contracts from the government for various defence purposes. 

Beyond defence use cases, drones have also demonstrated their applications in sectors like agriculture, healthcare, disaster management, traffic control, and logistics. To spur the sector, the Union government has undertaken a slew of reforms in the past few years, including banning import of foreign drones, and amending Drone Rules 2021 to open up the sector for startups. 

At the heart of all is the growing Indian drone tech ecosystem, which is projected to become a $13 Bn market opportunity by 2030.