PLI with US$ 16.3mn outlay announced for increased drone manufacturing

The scheme is expected to enhance the industry to US$ 120mn by 2024 and create 10,000 employment opportunities

September 16, 2021

Components including systems, devices, communications modules and payloads to be covered.

Annual sales turnover prerequisite for MSME beneficiaries pegged at US$ 272,312 for drones and US$ 68,078 for components.

Non-MSME expected to have annual sales turnover prerequisite of US$ 136,156 for drones and US$ 136,156 for components.

Scheme is expected to bring down export dependency and foster novel R&D capabilities in the industry.

The Union Cabinet, on September 15, 2021, announced a new Production Linked Incentive (PLI) scheme intended to increase the domestic production and operation of drones. The scheme has been allocated US$ 16.3 mn (Rs 120 crore) for a period of three years and will provide manufacturers with an incentive up to 20%. As per the announcement, the prerequisites for availing the scheme include an annual sales turnover stipulation of US$ 544,625 (Rs 4 crore) for non-MSMEs and US$ 272,312 (Rs 2 crores) for MSMEs in the drone category. With regard to the drone component category, the annual sales turnover stipulation stands at US$ 136,156 (Rs 1 crore) for non-MSMEs and US$ 68,078 (Rs 50 lakh) for MSMEs. 

The components that will be covered under the scheme  include emergency recovery systems, Inertial Measurement Units, ‘Detect and Avoid’ system to battery components, flight and ground control modules, cameras, communications systems and payloads. The minimum value addition on the net sales of both drone and drone components is expected to be fixed at 40% instead of 50%. 

In the long term, the PLI is expected to increase  the sector’s turnover to US$ 120 mn (Rs 900 crore) in 2024 from the current amount of US$ 8.16 million (Rs 60 crore). It will also help create 10,000 new employment opportunities and attract investments worth US$ 680mn (Rs 5,000 crore). Industry leaders opine that the PLI scheme will reduce heavy import dependency given that the sector currently imports close to 90% of the components from overseas. Entities in the space will also be given ample incentive to scale up production and engage in Research & Development activities. With strategic interventions at requisite points in the value chain, the PLI can be expected to transform the drone industry and greatly nurture domestic nascent potential. 

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