NEW DELHI: The civil aviation ministry proposes to offer as much as ₹1,800 crore as incentives to manufacture drones in India, increase adoption across defence and civilian sectors and reduce reliance on component imports from China.
The tentatively titled Mission Drone Shakti is expected to set aside ₹1,600 crore-1,800 crore over five years to fund and support research and development and local manufacturing of components including critical parts and incentivize drone sales and adoption, an official aware of the discussions said.
The plan is to introduce the scheme in FY27, targeting private Indian companies. The details are being finalized and after the finance ministry’s approval, it will be presented for the consideration of the Cabinet.
The proposed Mission Drone Shakti mirrors India’s production-linked incentive schemes across 14 sectors such as electronics, textiles, pharmaceuticals and automobiles, which had a cumulative outlay of ₹1.97 trillion. The scheme will offer financial incentives tied directly to measurable outcomes such as domestic value addition and incremental sales.
Initially, ₹500 crore-600 crore will be allocated for research and development, while the remaining ₹1,000 crore-1,200 crore will be split between manufacturing support for critical components such as propellers, motors and airframes, and sales-linked incentives, documents reviewed by Mint showed.
The benefits will be calculated on the basis of domestic value addition. The financial incentive payable is likely to be a portion of this value addition. A minimum value addition will be set for beneficiary companies to be eligible, the official added.
The civil aviation ministry is yet to respond to queries from Mint.
The move comes as the government looks to expand drone usage in agriculture, infrastructure inspection, logistics and surveillance, and defence. At least 12 ministries are being roped in to coordinate and shore up the adoption of drones.
Goal of self-reliance
"The scheme is aimed at reducing India’s dependence on imported drone parts, many of which currently come from China. Building a domestic supply chain for both civilian and strategic applications is more a need of the hour to bring in self-reliance," the official said.
Propellers, motors, sophisticated GPS models, advanced sensors, lithium polymer batteries and flight controllers are among the components that are imported. According to the Drone Federation India, an apex body of drone-makers and component manufacturers, the majority of smaller drone companies import more than 50% of the components.
"The top 10% players, who have 80% market share, are 70% indigenous," said Smit Shah, president of the Drone Federation India.
The federation has 550 drone companies as its members and a network of 204 component manufacturers on its flagship platform called Bharat Drone Stack, the country's indigenous drone component network.
"If such a scheme comes into effect, then it will give a push to India's drone manufacturing ecosystem. It is long pending to drive up economies of scale in India,” Shah said. “The government aims to create India as a global hub by 2030 for the drone manufacturing and drone services sector. The new scheme should look to push drone adoption into non-defence sectors too."
India's drone market, as per the federation, is pegged at ₹4,500 crore with some of the major entities being Adani Defence and Aerospace, Tata Advanced Systems Ltd, IdeaForge, and Newspace Research and Technologies.
RattanIndia, a diversified conglomerate that operates drones as a part of its new-age business through fully owned subsidiary NeoSky India Ltd, said in its February investor presentation that the drone market is projected to touch ₹1.66 trillion in FY28.
In 2021, India had introduced a ₹120 crore production-linked incentive scheme for drones, spread over three years. The scheme then was almost double the combined turnover of all domestic drone manufacturers in FY21. The beneficiary list released included 12 drone manufacturers and 11 component makers.
"The benefits of the new incentive scheme should accrue to the smaller players too, so that they actually get economies of scale and there is sufficient demand,” said Uday Narang, founder of Sooryauday Aerial Vehicles, a Faridabad-based drone-maker that recently supplied drones to the defence sector. “This will push indigenous component manufacturing too, rather than rely on imports. If only the larger players derive the benefits, then it would not help develop an ecosystem. Sector control remains limited to few."