Drone Startups Wary About Grey Areas In Govt Policy After Ban On Drone Imports

The drone sector in India is all set to enter a new phase following the ban on imports of drones as well as the decentralisation of the drone pilot license regime. As domestic players brace themselves for indigenous manufacturing, they need to tackle the technological and investment challenges. The next few years could be defining for stakeholders who are heavily reliant on imports at present.

The import prohibition comes amid a steady rise in demand for various types of drones across commercial, agriculture and entertainment spaces. Many startups have emerged in the drone sector as the opportunities it offers have caught the attention of technocrats and entrepreneurs. Even large companies like Reliance have a keen interest in the drone ecosystem.

At the same time, the outright ban has caught startups unaware. According to a notification issued by the Directorate General of Foreign Trade (DGFT), the import of drones in completely built-up (CBU), semi-knocked-down (SKD) or completely knocked-down (CKD) form is prohibited. Imports of drone components shall be, however, “free”.

The share of imports in the Indian drone ecosystem could not be immediately ascertained. Industry players have calculated that it is 60-70% and China accounts for a lion’s share.

Drone startups are now encouraged to do “true value addition and knowledge creation in India rather than assemble foreign-made drones in the country” and that is big takeaway of the new policy with regard to drone imports, according to Ankit Mehta, cofounder and CEO, IdeaForge, which develops drones solutions for applications across sectors.

New Rules Are Welcome, But Grey Areas Remain

The freeing up of drone component imports has helped clarify some grey areas when it comes to allowing startups to access components for their research, added Mehta.

Stakeholders are generally of the view that the ban is a step in the right direction as it brings clarity after the blanket ban on drones imposed in 2018. Government rules have been very unclear since 2014 when drones made their first appearance in India.

There are, however, some grey areas around policy even now which requires the government’s immediate attention.

Stating that better clarity is needed as to what is allowed and what is not, Karan Kamdar, CEO, Martian Way Industries, said drone frames, motors, etc. can be imported in kit form and assembled here.

“There is a clear need for the government to define the word DRONE —Dynamic Remotely Operated Navigation Equipment. They have not said quadcopter or hexacopter or anything like that,” Kamdar said.

The use of components across multiple sectors is another matter that deserves attention. For example, GoPro camera, which is mounted on drones, is used by others sectors as well and, therefore, the issue of duality comes up.

Challenges In Indigenous Manufacturing

The import ban is expected to act as an internal impetus at a time when there is brisk demand generation for customised drones. The predicament, however, is that drone manufacturers in India are mostly in assembly mode at present and are heavily reliant on imports. They are not used to creating from scratch. Industrial players looking for customised drones, on the other hand, want quick solutions. In that sense it is a tough situation to be in, said Kamdar while pointing out that “very optimum design solution” is already available.

“Drone frames or motors can be indigenously designed but for something that is very high precision, GPS or navigation instrument or flight controller, you are still bound to really import them. That is where the grey area is,” Kamdar added.

As of now, local players are mostly into 3D modelling, design and testing the airflow, analysis by software of the frame, etc. They would require time for the successful manufacturing of complete drones, including individual motors and the GPS system.

The blanket ban has caught the industry by surprise. Kamdar said it would have been better if stakeholders were consulted before the ban, which would have given a picture of manufacturing in India.

“There is going to be a little bit of a tempestuous situation … hopefully in the next 2-3 months it would be quite clear,” he added.

Swapnik Jakkampudi, cofounder of Skyair Mobility, sounded confident of the domestic players’ technical and manufacturing capability. He said India has the potential to emerge as the global hub for drone manufacturing.

“It is good news for stakeholders because we did not have clarity before because the rules were a little hazy. Now, we have got clarity. Imports of components like motors are allowed to import. So, the ban will protect the domestic demand … it will help the industry,” Swapnik Jakkampudi of Skyair Mobility said.

New Import Rules Open Up Opportunities For Drone Startups

The new policy with regard to drone imports is also seen as a pointer to the need to indigenously manufacture components. Industry watchers said startups should address this gap by starting local manufacturing of components. Citing the example of a startup, without naming it, which is into making wireless charger for drones, Kamdar said startups can think of providing solutions.

Localisation of components has in fact already started. For example, much better flight controllers are being produced in India. “But to get to that level where we can say that indigenously-made products are very good compared to other products is going to take some time because we have not gotten that opportunity before,” Kamdar said.

This would surely require good investments in research. “We will have to further invest… if there is demand, people will invest in infrastructure,” Jakkampudi noted.

The government support for such R&D is also crucial. The Centre can also encourage partnership with players overseas who can partner with local manufacturers and transfer technology.

The  Contradiction In Policies 

There are foreign-origin drone makers looking to sell in India. Drones by SZ DJI Technology Co, better known as DJI, are popular in India because “they are very sophisticated and easy to use”. A lot of players are DJI clients. But fully assembled, properly-packaged drones coming to India is a strict no now. That is a clear signal to China-headquartered DJI.

There is, however, a contradiction here. DigitalSky portal has listed DJI as one of the drones that are allowed. One can register and enlist one’s products on DigitalSky. “Now, how the government order will override it is to be seen. They will have to deal with it, DigitalSky and DGCA are involved now.

Meanwhile, two days after the DGFT notification imposing the ban on imports of drones, the civil aviation ministry has done away with the requirement of drone pilot licence for operating drones in India.

“It is good to see that after the 2018 ban, things changed in 3-4 years and DGCA and all coming. It is a good time to be in the industry,” said Kamdar.

Boost to Foreign Collaborations, Investments

Now that the thrust is on local manufacturing, will India become an export hub for drones? Jakkampudi sounded confident.

Probably five years from now, he said. “If we are able to get serious capital to get invested in manufacturing motors or batteries for drones… it is just about people putting that conviction into it. People are seeing demand and if people invest time and effort, we will be good enough to cater to domestic demand as well as the export market.”

Another perspective put forth is that the new import rules are also expected to prompt foreign companies to find local partners and set up manufacturing facilities in India. Kamdar said countries need to be convinced about potential in India to attract investments. China is out of the question for obvious reasons. Germany, Russia, the US and Norway have good drone technology.

A lot of money is allocated in the US towards the drone ecosystem. The startup scene in India, which is big with many emerging at regular intervals, can aim to tap this money. “For that again, we have to show that we have something very unique—wireless charger is worth an investment from an American company,” Kamdar noted.

How New Rules Will Impact Different Types Of Drones

There are various kinds of drones. Ready-to-fly (RTF) drones are one of them. In RTF, there is a little bit of assembly, but not building from scratch. Different kinds of things can be mixed and matched here. For instance, a different remote controller can be attached with it. Imports of RTF drones are unlikely to see much disruption. Drones with proprietary tech, which cannot be disassembled after importing, will be hit by the ban. China-made DJI drones, widely used for aerial photography, will bear the brunt of import restrictions.

Consumer drones are also unlikely to be hit. These are used in certain specific businesses such as servicing clients, aerial photography, 3D modelling for giving post-process data and video analytics. It is this service-oriented model in that is going on in India at present.

The market for customised drones is 100x times bigger, according to Kamdar. The customised solutions, AI solutions, for industrial customers cannot be put on consumer drones. Industrial customers need highly-customised drones which can talk to internal servers, can get commands remotely, and can view web-based data collected by drones.

Import restrictions and decentralisation of drone pilot regime, more than anything else, go on to highlight the government recognition of the sector. This comes after disapproval of drones in 2014 and the imposition of a blanket ban on them in 2018. Stakeholders are excited and gearing up for the action-packed years ahead.

Import restrictions and decentralisation of the drone pilot licence regime, more than anything else, go on to highlight the recognition of the sector. This comes after disapproval of drones in 2014 and the imposition of a blanket ban on them in 2018. Drone startup ecosystem is excited about the future prospects and are gearing up for action-packed years ahead.

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