How The Government’s Half-Baked Drone Policy Has Grounded Startups In India

On December 1, 2018, when then commerce and civil aviation minister Suresh Prabhu greenlit the Drone Regulations 1.0, a policy that allows civil or commercial unmanned aerial vehicles or unmanned aircraft systems (UAVs or UAS) to fly as planned, the small fraternity of drone industry was quite enthusiastic about the future of this sector. It was a relief after seeing the ban on drone use lifted and regulation introduced.

Unlike other policies, India’s drone regulations 1.0 was termed as a piece of tech art, as unlike other parts of the world, it envisioned the functioning of a Digital Sky platform which would be more advanced than the United States’ UTM (unmanned aircraft traffic management system). The Digital Sky was promised as a means to not only track drones in real-time but gives the officials authority to monitor and control the entire drone management system as well as determine take-off time and zones.

Announcing the launch last year, Prabhu had tweeted, “Happy to announce that we are launching the Online Registration Portal for #Drone Flying Permission, #DigitalSky from TODAY. The platform is now live.”

According to global market intelligence and advisory firm BIS Research, the Indian UAV market will reach $885.7 Mn by 2021, while the global market size will touch $21.47 Bn. This shows that despite the drone regulations, India’s drone startups are only expected to make a minor impact on the global stage by that year. However, considering the half-baked nature of the drone policy and the improper implementation of these schemes, drone startups will have a hard time even meeting that market size.

Earlier this year, Inc42 had published a detailed report on India’s drone startup ecosystem, which highlighted its nascent state and how policy changes could boost the industry. And eight months since the policy launch, we spoke to drone startups to understand if the regulations have really helped them boost their business and scale-up.

And sadly, the answer is ‘no’.

However, none of the startups criticised the content of the draft policy but rather the slow execution which makes it inconsequential.

Digital Sky Far From The Launch

Besides two firms — Skylark and Throttle — having recently got certifications for their micro-drone models under the visual line of sight (VLOS) category, there has been literally no development in this regard otherwise. Earlier this year, the ministry of civil aviation, however, released the draft note for Drone Regulations 2.0.

The Digital Sky, which has been in beta mode since the beginning, is now simply open for registrations. However, the platform is yet to be developed.

Karan Kamdar, founder and CEO of 1 Martian Way Corp, an AI startup manufacturing software and embedded AI products for drones, and president of the Indian Drone Racing League (IDRL) told Inc42, “Currently, people can get their company names registered and acquire a UIN (Unique Identification Number). But, as provisioned in the document, there is no automated system which could give permission for drones to fly. This whole aspect is yet to be laid out.”

He added that the UIN codes are not functional on the site, and it would require an ecosystem to develop around it as manufacturers also have to be ready. “And, unless the firmware on the drones are ready which could allow users to query the functional data from the platform as well as the drones, it’s a non-starter for people,” he added.

The Digital Sky was envisioned as a comprehensive drone-centric platform where startups and individuals have to submit a flight plan, Kamdar added. This would handle the backend operations for the clearance, check if other drones have already been given the permission to fly in the same area at the same time, and would suggest an alternate take-off time for your launch. However, all of these regulations are still simply on paper, Kamdar emphasised.

Vipul Singh, cofounder and CEO of Aarav Unmanned Systems said the flux in Digital Sky is typical of a government initiative. “The tender was recalled and revised. Now the contract is to be given to someone for the development and maintenance of the Digital Sky.”

Commercial Flights Are Still Not Legally Viable 

It’s not just the development of Digital Sky that remains on paper. Nothing significant has been done on the ground to give the drone sector the boost it needs for greater innovation and more work.

Given the current rate of development, drone industry stakeholders estimate that it will take at least another 6-12 months to get the policy regulations implemented on the ground.

Agreements pertaining to research and development and pilot projects provide a glimpse of the policy frameworks. Yesterday (August 1) the Survey of India, the national mapping agency under the ministry of science & technology signed an MoU with the department of revenue and land records under the government of Maharashtra, to undertake the large-scale mapping of some rural areas in the state using drones.

However, besides such token projects, the commercial infrastructure for the industry is just not there yet. Aarav’s Singh added, “According to the Regulations 1.0, there will be labs which are supposed to be in place to check the manufacturing compliances before giving the certificates. Those labs are not functional. There are still discussions on how these compliance tests will be conducted. Test sites are not yet finalised. What will be the procedure of the test flights? flight training organisation has not yet been made. There is an ambiguity over the operational procedures as well.”

Singh, who is also one of the founding members of Drone Federation of India, added that certain security clearances from the home ministry do not have the relevant drone categories. The ministry has been urged to include these so that startups and individuals can apply for these permits. There is no fixed operating procedure for radio equipment for drones and their certifications or approvals.

“Lots of small, small operational issues are still there. Right now even after being compliant, one can’t take the permission to operate.” – Vipul Singh

Has Lifting The Ban On Drones Made Any Impact?

While most founders Inc42 spoke to agreed that the biggest positive change is that drones have been unbanned through the regulatory announcements, but the primary complaint is that getting the unique ID number and the Unmanned Aircraft Operator Permit (UAOP) don’t serve any real purpose.

For instance, Kamdar said, “What purpose does getting UIN number serve? I don’t know! You can pay INR 25,000 and get your company registered and get UAOP and UIN. However, these are just incremental steps. This could be looked positively from the investment point of view. Development wise, it is just 1% of what’s needed.”

Another founder, Pragadish Santhosh, who is the CEO of Aero360 said the first round of regulations refer to structural testing that needs to be performed by drones and the corresponding companies. However, this system is not yet live. However, due to Drone Regulations 1.0, the startup’s clients keep asking about testing and orders. “Apart from the clients, we are also getting a number of inquiries from local customers, asking about the UIN and UAOP and other approvals.”

Aarav’s Singh said that startups are facing difficulties in executing their businesses because the authorities have this notion that rules are now in place, and only the clearance is a matter for startups to comply with. “Local authorities are not aware of the existing challenges. Right now even after being compliant, one can’t take the permission to operate,” he added to point out the futile nature of the regulations

Are Drone Startups Heading For A Crash?

Currently, just about 40 drone startups are active in India. Over 90% of them are startups that do not have the luxury of burning cash on trials and experimental runs in this regulatory uncertainty.

As Singh pointed out, “Lots of drone startups are actually bleeding. There has to be some grace period for manufacturers, startups to catch up with the compliances. What’s happening is that the entire drone industry comprises of startups. Many of them haven’t even reached Series A. They have no appetite for sitting idle without revenue. Every startup needs to have a runway for 8-12 months when it comes to VC funding. If you go for an illegitimate way for operation it’s again not good for startups.”

The big question is, are VCs ready to back startups that might have to pivot their models multiple times based on regulations? Then there’s the matter of whether founders are ready to burn cash and wait out this period of uncertainty or will their drone startups crash and burn, especially when many of them are still struggling to raise seed funding.

These are the questions the government needs to answer post-haste, as the window of opportunity for Indian drone startups is closing in the face of sprightly competition from their western counterparts, who have far more favourable domestic conditions and can afford to look at global expansion including in India.