Indian drone industry flies high with 3x growth in investments over 3-years

With investments totalling nearly $50 million, the current fiscal is all set to be the best year for India’s fledgling drone industry.

In FY2022-23, drone start-ups attracted $49.7 million in investments across 20 rounds, compared to $25 million received in FY2021-22 across 23 rounds. The figure for FY2020-21 was $11.2 million across 20 rounds, according to data from the research firm Tracxn Technologies. 

Thus, investments in the segment have registered 300 per cent growth in the last three fiscals.

“Government policies are one of the primary elements that have led to this investor fervour in the sector,” co-founder & CEO of Tracxn Technologies, Neha Singh told Business Today, adding, “Also, 90 per cent of the Indian airspace is now accessible to drone use after the laws and regulations were liberalised in 2021.”

Besides, finance minister Nirmala Sitharaman announced the Drone Shakti Scheme as part of the proposals the Union Budget 2022 proposals. The scheme seeks to unify the efforts of the drone ecosystem through the institutionalisation and creation of a structure to enable synergies among multiple stakeholders.

Subsequently, a Rs 120 crore Production Linked Incentive (PLI) scheme was also approved for the segment in the same year.

“Added to this, the government’s initiative for atmanirbharta (self-reliance) in defence purchases and drones finding increased use cases in a variety of fields, including surveillance, medicine delivery, food delivery, traffic monitoring, agriculture, etc., have greatly influenced the strong investment sentiment in the industry,” averred Singh.

Start-ups raise record sums

In 2022, the Pune-headquartered company DroneAcharya was the first Indian drone player to go public.

Garuda Aerospace, a multi-utility drone manufacturer raised $22 million in the Series A round, out of which $17 million was raised in February this year, which is almost equivalent to the total funding raised by the Indian drone market in the 2021 calendar year.

In February, the Qualcomm-backed drone start-up ideaForge filed its Draft Red Herring Prospectus (DRHP) with markets regulator Sebi for an IPO. The offering comprises a fresh issue of shares worth Rs 300 crore and an offer for the sale of 4,869,712 equity shares.

However, easy access to funding continues to elude many companies.

“Such companies eventually either shut down or get acquired. And that limits the segment’s growth potential,” says founder & CEO of Garuda Aerospace, Agnishwar Jayaprakash.

He feels that such start-ups can partly get around the challenge by being open to venture capital and angel investors. He also recommends the formation of a separate Ministry of Startups as well as a start-up exchange along the lines of the SME Exchange on BSE.

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