FICCI, in a report published in association with EY, made the recommendations to address the existing bottlenecks in drone manufacturing, which, in turn, can help India emerge as a drone hub
On drone manufacturing, it said there is a need to set up a Drone Industry Research Assistance Council on PPP model
Drone exports would play a key role in helping the country emerge as a drone hub, the report said, adding that there are several obstacles to it
The Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the government to constitute an Inter-Ministerial Committee (IMC) on drones and counter-drones, with representation from all the concerned ministries and departments dealing with both sectors.
In a report, prepared in association with EY, FICCI gave recommendations to the Indian government to address the existing bottlenecks in drone manufacturing, which, in turn, can help India emerge as a drone hub.
“The IMC should look into all the issues including innovation, technology development, regulations, mother technology development, global value chains, testing, skill development, training, global standards, reciprocity issues, custom duties to make this sector globally competitive and to become the manufacturing hub for the world,” the report said.
Besides, the industry body also emphasised the importance of better policies, more funding, and streamlining various processes to enable more drone exports.
The government could encourage drone adoption in states and union territories through policy interventions, said the report, adding that simplifying procurement processes of drones is also important.
“Considering that drones are an emerging technology and all companies working on the same are startups, procurements process should not have a heavy Pre-Q criterion (most drone companies do not have significant revenue at this stage) — the process should be QCBS based i.e., Quality cum Cost-Based Selection,” the FICCI report said.
It is pertinent to note in this context that the Indian government has already increased its focus on bolstering India’s drone industry. A procurement framework for usage of drones is in the works to enable public sector enterprises to follow guidelines on buying drones as equipment or using them as a service.
Moreover, the FICCI-EY report said that drone exports would play a key role in helping the country emerge as a drone hub, but there are several obstacles to it.
It is essential to provide Indian manufacturers a level-playing field, hence, if anomalies in the special chemicals, organisms, materials, equipment and technologies (SCOMET) licensing process are removed, it would go a long way in empowering the country’s manufacturing entities, the report said.
It also said that taking drones abroad for international exhibitions and demonstrations is currently a very cumbersome and lengthy process, which hampers international marketing activities for Indian manufacturers.
In order to streamline the process, the report suggested that the Directorate General of Foreign Trade (DGFT) could allow OEMs to export via self-declaration for purposes of demonstrations and trade shows, add provision of extending the demo period on existing and active applications, among other measures.
The report further said that it is recommended for the government to provide innovation funding for strategic and high-risk technologies and innovations, and invest in building Indian ecosystem players. On drone manufacturing, it said there is a need to set up a Drone Industry Research Assistance Council (DIRAC) on PPP model.
DIRAC can set up accelerators for innovation and growth of indigenous drone-related IPs and startups, establish collaboration models of partnership across industry, academia and the public sector, among others, the report added.
Besides, it noted that many drone startups are still unable to access bank credit from traditional channels, mainly due to high credit risk.
“Financial institutions should provide collateral-free and personal-guarantee free project finance loans at low-interest rates to startup or MSME companies that have received confirmed government or private sector orders. This will enable them to use the funds toward their working capital needs to fulfil orders,” the report noted.
Government’s Focus On Drone
The government has announced a Production Link Incentive (PLI) scheme under which incentives of INR 120 Cr would be given over three years to promote domestic manufacturing of drones. It recently released the second provisional list of 23 beneficiaries under the scheme, which included names like Dhaksha Unmanned Systems, Garuda Aerospace, Adani-Elbit Advanced Systems India, among others.
Recently, the government also announced financial assistance to incentivise farmers to adopt drone technology.
The Ministry of Civil Aviation in May said that Digital Sky, the Directorate General of Civil Aviation’s (DGCA’s) online platform for various activities related to drone management, is set to be fully functional by October this year.
However, while the Indian government has taken several steps towards making the country the “drone hub of the world” by 2030, more needs to be done.
“For India to meet its manifest destiny as a drone manufacturing hub, it is essential that various ministries and departments synergize their efforts to ensure rapid progress and to overcome roadblocks on a war-footing,” the FICCI-EY report said.
As per a Statista report, revenue in the drones segment in India is expected to reach $32.28 Mn in 2027 from $19.93 Mn in 2022.
