3 min read.Updated: 01 Oct 2021, 11:45 AM ISTVignesh Santhanam
A supportive policy environment makes this a good time for drone manufacturing in India to take off and herald the next generation of manufacturing advance
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The next generation of innovative manufactured products and services will lead us to a dramatic productivity boost, invigoration of archaic processes and quality products. The best way for India’s drone sector to take pole position globally through economic competition and job creation is by investing in innovation and entrepreneurship. Technologies of the fourth industrial revolution are known to have too many moving parts owing to rapid advancements, policy requirements and ambiguous end user uptake. Drones are an ideal case study of this phenomenon. As per the global competitiveness report published by the World Economic Forum in 2019, India ranked 68 overall (down 10 places) and 4 among the BRICS nations, with China at 1. Despite strong fundamental pillars such as macroeconomic stability, market size and innovation, India has had mixed results largely due to the enablers of competitiveness.
For the drone industry in India, 2021 has thrown up a series of lodestars that have addressed this factor—from the liberalization of the drone policy to the near-instant commissioning of the flagship ‘Medicine from the Sky’ program by the World Economic Forum, Govt of Telangana, Apollo Hospitals and Niti Aayog; the SWAMITVA Yojana, which could potentially be the biggest drone survey in recorded history, to the unlocking of a host of sectoral opportunities for drones; all these programs are an outlay of how a multi-sectoral approach can turbo-charge a sector.
India’s recent production-linked incentive (PLI) scheme is another nudge by the central government to incentivize local manufacturing and encourage investment in the sector. The PLI rate being kept at 20% for the next three years marks the beginning of a very critical window for India’s rising drone industry. One cannot help but look back and draw parallels with the automotive sector in India, which grew on the back of well-curated company strategies and explorative business models that brought in healthy competition into the sector and made the most of India’s market expanse as well as the buying capacity of India’s middle class. The sector’s trajectory ran in parallel with aggressive innovation—the four-stroke engine, tubeless tires and more recently electric vehicles, among a host of other advancements. The recent ₹26,058-crore PLI scheme to push new technology and clean fuels are an incremental force multiplier for a sector that has an annual turnover equivalent to the size of the sixth-largest economy in the world. After years of navigating the corridors of regulations, frequent policy hold-ups and pro bono demonstrations of efficacy, India’s drone industry has been rewarded with this scheme at its crack of dawn.
In 2020, the Reserve Bank of India included start-ups into its priority sector lending category to ensure credit penetration to deficient areas and providing up to ₹50 crore. On the burning question of whether this is what the sector needs, there is never a more ideal scenario—relaxed regulations, economic incentives, supreme engineering talent pool and industry platforms that catalyze action on ground. This makes a perfect setting for increased adoption of drones in India. These benefits are all to be reaped not just by industry but also the end user groups. Be it the department of health in Arunachal Pradesh or the collectorate of Vikarabad or the commissionerate of agriculture in Maharashtra, the drone industry may soon have the bandwidth to pass on the stimulus outlays, of which it is a beneficiary, as incentives to the end user, be it through competitive sales of hardware or services. This is an ideal move on the chess board considering the continuous onslaught of imported, intuitive, easy to use, low-cost drones into India and other developing nations. Philip Kotler famously said, “China is the world’s factory while India is the world’s office". This scenario provides India’s industry the jump-start it was waiting for on its journey to Atmanirbharta.
That said, strategy must be the prime focus for developing drones, drone components, ancillary technologies, hardware and all fourth industrial revolution technologies at large. With the payout being nearly double the combined turnover of all domestic drone manufacturers in 2020-21, the PLI scheme can help pave the way for a close to 100% Make in India, which would involve conceptualizing, designing and manufacturing in India. Reduced dependence on the import of raw material and clarity on all fronts—policy, manufacturing and economics—can now enable the drone sector start-ups and small and medium sized enterprises chalk out well defined business plans and outreach schemes, while orienting its first mover advantage to innovation and technology rather than knowhow of policy navigation.
Like drones, entrepreneurship too has several form factors. Every stakeholder has demonstrated this mindset in this journey—government, industry, civil society and expert groups. The time is ripe for us to advance from the laboratory to the production line.
Vignesh Santhanam is the India Lead for Aerospace and Drones at the World Economic Forum