Make in India: First Rs 30-crore installment released to drone firms under PLI scheme

Nearly Rs 30 crore has been released to the shortlisted drone and drone components manufacturers under the government’s flagship production-linked incentive (PLI) scheme for FY23, said the Ministry of Civil Aviation.

The beneficiaries include drone manufacturers and drone component manufacturers. However, out of the 23 beneficiaries selected earlier, some were deprived of the incentive for reasons such as incomplete paperwork, sources told Business Today.

The total PLI incentive of Rs 120 crore is spread over three fiscals and is nearly double the combined turnover of all domestic drone manufacturers for FY21.

Under the scheme for the Indian aviation industry’s sunshine segment which, along with artificial intelligence and machine learning, is described as the next frontier in technology the PLI has been determined at 20 per cent of the value added. This is among the highest extended under the scheme.

“The PLI scheme has given local manufacturers the required boost and financial push to increase their manufacturing capabilities. In the first year itself, the beneficiaries of the PLI scheme have exceeded the expectations of the government and we anticipate a two-to-three times growth in the industry year-on-year,” said co-founder & director of the Bengaluru-based full stack drone technology company Asteria Aerospace, Neel Mehta.

Calling the scheme an unparalleled intervention, Ankit Mehta, co-founder & CEO of the country’s largest drone maker ideaForge, added: “What the scheme does is very interesting. It tells you that you take your sales, subtract the purchases you have done from the rest of the world and the local market, and whatever value addition that you do as a business, 20 per cent of that gets returned to you. That is a huge incentive in doing more development in-house.”

Incentivising manufacturing

The value addition is calculated as the annual sales revenue from drones and drone components minus the purchase cost of drones and drone components. The sales revenue and purchase cost are inclusive of GST.

The minimum value addition norm has been at 40 per cent of net sales for drones and drone components instead of 50 per cent for other sectors. Similarly, the PLI rate has been kept constant at 20 per cent for all three years of the scheme.

Developers of drone-related software are also included in the scheme. PLI for a manufacturer is capped at 25 per cent of the total annual outlay to allow for a widening of the number of beneficiaries.

In case a manufacturer fails to meet the threshold for the eligible value addition for a particular financial year, they can claim the incentive in the subsequent year after making up for the shortfall.

The government notified the PLI scheme for drones and drone components in September 2021 as part of its efforts to develop the drone segment into a $20-billion industry by 2030.

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