PLI Scheme for Manufacturing Drones and Drone Components in India

The Production-Linked Incentive (PLI) scheme for Drones is a government initiative aimed at promoting the manufacturing of unmanned aerial vehicles (UAVs) in India. Overall, the PLI scheme for drones is expected to boost the domestic drone manufacturing industry with the help of the financial incentives to manufacturers, create job opportunities, promote innovation and research and development in this sector. The Project Management Agency (PMA) will be responsible for provision of secretarial, managerial, and implementation support and other responsibilities as deputed to it by the civil aviation ministry.

Some of the Key Features of the Scheme are:

• The scheme provides financial incentives to manufacturers of drones in India. The incentives are linked to the value addition done by the manufacturer, and the scheme is expected to provide benefits worth Rs 120 crore over three years.
• The scheme is divided into three tiers based on the value addition done by the manufacturer. The higher the value addition, the greater the incentive provided.
• Manufacturers interested in availing the benefits of the PLI scheme for drones need to register with the Directorate General of Foreign Trade (DGFT). To avail the incentives, manufacturers will have to meet certain performance requirements related to production capacity, sales, and exports.

 

Calculation of Incentives:

• The incentive for manufacturers of drones and drone components has been capped at 20% of the value addition made by them. This shall be calculated as:

• In case the manufacture fails to meet the threshold for the eligible value addition in India for a particular financial year, the manufacturer would then receive the said PLI in the subsequent financial year subject to making up the said shortfall.

 

Eligibility:

• Companies registered in India that manufacture drones or drone components are eligible only.
• The list of Drones and the components eligible for the scheme keep modifying by the Federal Government time to time. The eligible products under Drone Components currently are–

1. Airframe, propulsion systems, (engine and electric), power systems, batteries and associated components, launch and recovery systems.
2. Inertial Measurement Unit, Inertial Navigation System, flight control module, ground control station, and associated components.
3. Communication systems (radio frequency, transponders, satellite-based, etc.).
4. Cameras, sensors, spraying systems, and related payload, etc.
5. ‘Detect and Avoid’ system, emergency recovery system, trackers, etc. and other components critical for safety and security.
6. Software for drone and drone components.

• Manufacturing operations should be carried out in at least one location in India.
• The scheme is open to all Indian manufacturers of drones, including start-ups, MSMEs, and large companies.
• There has been a Minimum Annual Sales Turnover set for a company to claim the benefits of PLI as mentioned below-

 

Minimum Annual Sales Turnover for Indian MSMEs and Start-ups		Minimum Annual Sales Turnover for Indian non-MSMEs
Drone	Drone Components	Drone	Drone Components
INR 2 Cr.	INR 0.5 Cr.	INR 4 Cr.	INR 1 Cr.

 
Overall, the PLI scheme for drones represents a significant opportunity for eligible manufacturers to increase their competitiveness, contribute to the growth of the Indian drone industry, and help India become a leader in the global drone market.
 

Overall Challenges Involved:

While a recipient may enjoy several benefits and incentives of the PLI scheme, there are also some challenges that every manufacturer should be aware of.

• Recipients of the incentives are required to meet certain production targets, comply with quality standards and submit regular reports; in order to continue receiving the incentives and benefits of the PLI scheme. Companies should be able to ensure that they have necessary resources and systems in place to fulfil all the obligations as a recipient.
• The PLI scheme for drones is a competitive process, and not all applications may be approved. Companies should be prepared for competition from other manufacturers and should ensure that their application is complete, accurate, and meets all the eligibility criteria.
• The drone industry is still evolving and changing. The regulations related to drones are subject to change. Companies that receive incentives under the PLI scheme for drones should stay informed about any changes to regulations that may impact their operations.
• Economic conditions can impact the demand for drones and the viability of manufacturing operations. Companies should consider economic factors and ensure that they have a solid business plan and financial projections before applying for the PLI scheme for drones.
• While the PLI scheme for drones may help companies increase their competitiveness, it's important to ensure that there is sufficient market demand for drones to justify the investment. Companies should conduct market research and assess the potential demand for their products before applying for the PLI scheme for drones.

 
Overall, the PLI scheme for drones represents a significant opportunity for eligible manufacturers to increase their competitiveness, contribute to the growth of the Indian drone industry, and help India become a leader in the global drone market.
 
To learn more about how to pitch for the PLI scheme, the process of application, disbursement of incentives, the key obligations of the recipient- CLICK HERE