Overview: Drones are unpiloted aircraft that are either remotely controlled by an operator or autonomously by onboard computers. Though at a nascent stage, drones are commonly used for military and commercial purposes, including surveillance, crop protection spraying, surveying construction projects, filmography, among others. With technological developments and ease of reform, the application of drones is expected to expand to other areas as well.
According to the Civil Aviation Ministry, as the global drone industry grows, the Indian drone industry is expected to reach INR 120-150 billion (USD 1.5-1.9 billion) by 20261 Currently, the use of drones is limited to mostly the infrastructure and agriculture sectors. However, an increasing number of drone applications coupled with favorable government regulations; a growing number of startups who are engaged in identifying new applications for drones are among the primary reasons why the drone industry is expected to continue to grow.
Over the last 18 months the sector has raised $50 mm / INR 375 Crores in PE/VC funding. India’s use case for drones was initially more of defence equipment but use cases for drones have developed over time. They now carry anything and everything, including vaccinations and medical supplies, as well as gadgets, food, and groceries. The primary drivers for growth in this industry are influenced by some of the following:
- Government initiatives: Government of India has stated its objective to make India a drone hub by 2030 for which multiple initiatives have been launched including plans to attract FDI of ₹50,000 cr. in the next 3 years, easing MSME eligibility for PLI schemes etc. The introduction of a liberalized drone regulation in 2021 and the government’s support for local production under the PLI plan, offering a total incentive of INR1200 Crores to drone producers is expected to drive
- Increased Focus from startups and large corporates: Startups in India are focusing on strengthening technology capabilities to compete with global competitors. Several corporates have also started focusing on this
Increasing Research: Since 2015, nearly 37 patents around technologies, such as for propeller safety in automated aerial vehicles and hybrid aerial vehicles, have been filed by leading drone companies2. Dominant Use Cases so far in India: Apart from defence, Indian commercial use cases have been driven by areas such as payload deliveries for medicines, agricultural surveying, law enforcement and project monitoring. Areas of application demanding low technical skills can create intense competition for drone service providers. On the contrary, areas demanding high sectoral expertise and technical know-how will create entry barriers for drone service providers. For instance, agricultural spraying and industrial maintenance and monitoring are low-competitive applications that require high technical knowledge, whereas entertainment and media and law enforcement surveillance are high-competitive applications that need little technical understanding.
Drone as a Service: The advent of drones-as-a-service (DaaS) is helping enterprises manage expenses. The price of an enterprise-level drone can be incredibly expensive (INR 10 -25 lakhs), which is why most companies are opting for drones as a service. The drone services market is divided into three categories – drone maintenance, repair, and overhaul (MRO), drone platform services and drone training and education services. The drone service market in India was valued at USD130.4 million in 2020 and is expected to reach USD 4.9 bn by 2030, at a CAGR of 44.4 per cent. Drone service market segment, drone MRO services and drone training and education services are predicted to grow at a CAGR of 46.8 per cent and 45.2 per cent, respectively, from 2020 to 2030.
Apart from the Drone-as-a-Service, Drone manufacturing is also expected to grow rapidly to support this growth. We believe the drone manufacturing business should be at atleast 50-60% which would amount to $3.0 billion by 2030.
Drone Regulations: The regulations in India regarding Drones have evolved over time from an outright ban to now a co-enabling regulatory framework designed to drive the growth of the industry.
Drone Rules 2021 were the key enabler in which a lot of restrictive clauses were dropped, airspace where drones could operate was freed up. Also in Feb 2022, the government restricted the import for foreign drones while allowing for import of drone components.
Some of the key clauses in the new regulatory rules are:
- Definition of Drones: The unmanned aircraft system shall, based on the maximum all-up weight including payload, be classified as follows:
- Nano unmanned aircraft system: weighing less than or equal to 250 grams;
- Micro unmanned aircraft system: weighing more than 250 grams, but less than or equal to 2 kgs;
- Small unmanned aircraft system: weighing more than 2 kgs, but less than or equal to 25 kgs;
- Medium unmanned aircraft system: weighing more than 25 kgs, but less than or equal to 150 kgs
- Large unmanned aircraft system: weighing more than 150 kgs
- Digital sky platform is a user-friendly online single-window system. Minimal human interface and most permissions are self-generated. The platform shows airspace across India dynamically with different red and yellow zone displayed. No permission required for operating drones in green zones. Yellow zone, where ATC permission is required, has been reduced from 45 km to 12 km from the airport perimeter.
Security clearance prior to issuing a drone license abandoned. Fee payments are delinked from the size of the drone now. Total number of forms to be filled has come down to five from the previous 25 forms.
- India now just requires a Remote Pilot Certificate (RPC) issued by a DGCA-approved drone school through the DigitalSky Platform. No RPC required for operating a drone up to 2kg and for non-commercial use.
- No person shall operate an unmanned aircraft system without first registering it on the digital sky platform unless exempted by DGCA. Recreational and commercial drone operators must seek issuance of the UIN from DigitalSky portal. It just requires portal account login, UAS Serial Number from dashboard, and INR 100 application fee.
Government Schemes: The government is already leveraging the power of drone technology in various development programmes.
1) SVAMITVA Scheme (Survey of Villages and Mapping with Improvised Technology in Village Areas) was launched in April 2020 to help Indian rural residents establish clear ownership of their properties by mapping land parcels through drones. Drones being used to create land records. INR 1800 Crores overall marketsize. Phase 1 covering 100,000+ villages completed, Tenders invited & being awarded in a very short span for Phase 2 comprising 500,0000+ villages
2) Sub Mission on Agricultural Mechanization (SMAM): Promotion of drone usage for enabling Agritech. ICAR Institutes, Krishi Vigyan kendras and state agriculture colleges to receive lower of 100 % or INR 10 lakhs grant for drone purchases. Lower of 40-50% or INR 4-5 lakhs grant funding for drone purchase to agriculture graduates establishing custom hiring centres. Overall potential market size: INR 75,000 Crores.3
1 KPMG report on Drone 2022
2 KPMG report on Drone 2022
3 EY Report on Drone Destination