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Drones manufacturing: Incentives of Rs 120 crore to be given under PLI scheme

Incentives worth Rs120 crore to be given in the next 3 years under the PLI scheme for drones manufacturing and drones components announced by the Govt on Thursday
Drones manufacturing: Incentives of Rs 120 crore to be given under PLI scheme
Drones manufacturing: Incentives of Rs 120 crore to be given under PLI scheme

New Delhi: The central govt has announced the Production-Linked Incentive (PLI) scheme for drones and drone components manufacturing on Thursday. "Under the PLI scheme, incentives of Rs. 120 crore will be given in the next 3 years, this amount is 1.5 times the combined size of the manufacturing drone sector", Union Minister of Civil Aviation Jyotiraditya M. Scindia said briefing journalists here in New Delhi at National Media Centre.

"Over a period of three years, estimated investment worth Rs 5,000 Crore for manufacturing sector drones will be done which in turn will bring a turnover of Rs 900 crore, and 10,000 job opportunities will be created", said the Minister. "Our objective is to establish India as a global drone hub by 2030 and Ministry of Civil Aviation is committed to facilitating industry, service delivery and consumers in achieving the aforesaid target", he added.

The drones and drone components manufacturing industry may see an investment of over INR 5,000 crore over the next three years, the Ministry said in an official statement issued Thursday evening. "The annual sales turnover of the drone manufacturing industry may grow from Rs 60 crore in 2020-21 fold to over Rs 900 crore in FY 2023-24. The drone manufacturing industry is expected to generate over 10,000 direct jobs over the next three years", it added.

The drone services industry (operations, logistics, data processing, traffic management etc.) is far bigger in scale.  It is expected to grow to over Rs 30,000 crore in the next three years. The drone services industry is expected to generate over five lakh jobs in three years.


Here are the salient features of the PLI scheme announced for drones manufacturing:

  1. The total amount allocated for the PLI scheme for drones and drone components is INR 120 crore spread over three financial years.  This amount is nearly double the combined turnover of all domestic drone manufacturers in FY 2020-21. 
  2. The incentive for a manufacturer of drones and drone components shall be as high as 20% of the value addition made by her.
  3. The value addition shall 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.
  4. The Government has agreed to keep the PLI rate constant at 20% for all three years, an exceptional treatment given only to the drone industry.  In PLI schemes for other sectors, the PLI rate reduces every year.
  5. The proposed tenure of the PLI scheme is three years starting in FY 2021-22.  The PLI scheme will be extended or redrafted after studying its impact in consultation with the industry.
  6. The Government has agreed to fix the minimum value addition norm at 40% of net sales for drones and drone components instead of 50%, another exceptional treatment given to the drone industry.  This will allow widening the number of beneficiaries.
  7. The PLI scheme covers a wide variety of drone components:
  8. Airframe, propulsion systems (engine and electric), power systems, batteries and associated components, launch and recovery systems;
  9. Inertial Measurement Unit, Inertial Navigation System, flight control module, ground control station and associated components;
  10. Communications systems (radiofrequency, transponders, satellite-based etc.)
  11. Cameras, sensors, spraying systems and related payload etc.;
  12. 'Detect and Avoid’ system, emergency recovery system, trackers etc. and other components critical for safety and security.
  13. The list of eligible components may be expanded by the Government from time to time, as drone technology evolves.
  14. The Government has agreed to widen the coverage of the incentive scheme to include developers of drone-related IT products also.
  15. The Government has kept the eligibility norm for MSME and startups in terms of annual sales turnover at a nominal level - INR 2 cr (for drones) and INR 50 lakhs (for drone components).  This will allow widening the number of beneficiaries.
  16. The eligibility norm for non-MSME companies in terms of annual sales turnover has been kept at INR 4 crore (for drones) and INR 1 crore (for drone components).
  17. PLI for a manufacturer shall be capped at 25% of the total annual outlay. This will allow widening the number of beneficiaries.
  18. In case a manufacturer fails to meet the threshold for the eligible value addition for a particular financial year, she will be allowed to claim the lost incentive in the subsequent year if she makes up the shortfall in the subsequent year.

Speaking about the estimated payout schedule of the PLI scheme, the Minister said that Rs 16 crore will be given away during FY'21-22 as part of the incentive. Which will be doubled to Rs 32 crore in FY'23 and raised to Rs 72 crore in FY'24. 

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