India’s burgeoning drone industry has captured the attention of many investors, emerging as an attractive long-term investment opportunity due to its rapid evolution, fast growth, and expanding applications. The Indian drone industry is poised for significant growth, driven by the development of globally competitive and technologically superior drones by Indiancompanies, creating immense export potential.

Prior to the Covid-19 pandemic, the drone industry was on a steady growth trajectory. However, the industry was accelerated by the increasing adoption of drones across diverse sectors and regulatory advancements that have facilitated drone usage.

 

GOVERNMENT SUPPORT AND FAVOURABLE REGULATORY ENVIRONMENT
Recognizing the immense potential of drones, the Indian government has adopted a proactive approach, enacting supportive policies and regulations to nurture the industry’s growth. The National Drone Policy serves as a comprehensive framework for drone operations, ensuring adherence to safety, security, and privacy standards.

 

Furthermore, the policy fosters innovation and entrepreneurship by streamlining the regulatory process for drone manufacturers and operators. Additionally, the government has established dedicated drone 0 corridors and testing facilities, creating a nurturing ecosystem for research, development, and innovation. These initiatives have catalyzed industry growth and provided the necessary support for the domestic drone industry, which is expected to witness accelerated expansion.

 

FINANCIAL PACKAGE FOR DRONE INDUSTRY
The Indian government has implemented several initiatives to support the growth of the drone industry:
 

• Drone Shakti Scheme
Launched in 2021, this scheme aims to promote drone manufacturing and innovation by providing financial incentives to start-ups and MSMEs. It offers grants of up to`5 crore for eligible projects. 

 

• PLI Scheme For Drones And Drone Components
This Production-Linked Incentive (PLI) scheme incentivizes domestic manufacturing of drones and drone components by providing financial assistance to eligible manufacturers. It offers incentives of 4% to 15% of the incremental sales turnover over a ive-year period.

 

• Funding For Research And Development
The government has allocated funds for research and development in drone technology, supporting universities and research institutions to develop cutting-edge drone solutions. 

 

EXPANDING MARKETS ANDAPPLICATIONS

India’s drone industry is one of the fastest growing in the world, projected to reach a value of US $2 billion by 2026, driven by the growing demand for drones across  diverse sectors. In recent years, India has seen a significant increase in drone adoption for a wide range of applications, including:

• Agriculture: Drones are being used to monitor crop health, spray pesticides, and collect data on soil quality.

• E-commerce: Drones are being used to 'deliver packages to remote areas and to improve logistics efficiency.

• Infrastructure Inspection: Drones are being used to inspect bridges, power lines, and other infrastructure assets.

• Emergency Response: Drones are being used to assess damage after natural disasters and to search for missing persons.

• Filmmaking: Drones are being used to capture aerial footage for films and television shows. 

• Delivery Of Food And Other Goods: Drones are being used to deliver food and other goods to customers in urban areas.

• Surveillance: Drones are being used to survey public spaces, such as airports and stadiums.

• Wildlife Conservation: Drones are being used to monitor wildlife populations and to combat poaching. 

 

More importantly, drones are expected to be a disruptive force in the future, revolutionizing a number of industries, including the military, emergency services, aerospace, and potentially even the taxi industry. The ongoing advancements in drone technology, including improvements in battery life, sensors, AI capabilities, and communication systems, are expanding the range of applications and increasing the efficiency and effectiveness of drone operations.

 

It is expected that these advancements will not only expand the traditional uses of drones but also open up new and innovative applications that were previously unimaginable. Defence and healthcare, disaster management, for instance could present big opportunities in terms of providing scale and value. However, these newer  applications are costly.  

 

The ticket size of new drones is in the upwards range of several lakhs due to the criticality of the applications and the advanced technology involved. India shares its border with several countries, including China and Pakistan, necessitating constant vigilance. In May ’22 alone, there were approximately 53 drone incursions along the India-Pakistan border.

 

It is estimated that drone intrusions into India from Pakistan nearly doubled in CY22, as terrorist groups and drug smugglers based in Pakistan have increased their use of drones to transport weapons, explosives, and narcotics. The use of drones by terrorist groups and drug traffickers poses a severe threat to India’s security. 

 

GLOBAL DRONE INDUSTRY AND OPPORTUNITIES FOR EXPORTS
India is the world’s second-largest drone market after the United States, accounting for around 22.5% of global drone imports. With its strong manufacturing base, skilled workforce, and access to major markets, India has the potential to become a global leader in the drone industry. 

 

As Indian manufacturers continue to innovate and provide affordable yet reliabledrone solutions, they are well-positioned to capitalize on the growing global demand for drones and contributesignificantly to the industry’s growth and export potential.

 

The global drone industry is poised for rapid growth, with a compound annual growth rate Global Drone Market Size (CAGR) of approximately 20% from 2022 to 2030, reaching an estimated value of $91.3 billion by 2030. The industry is currently valued at $21.1 billion in 2022 and has experienced significant growth at a CAGR of 19% from 2018 to 2022. This growth is expected to accelerate further, with the market reaching $51.4 billion  by 2027 and then leaping to $91.3 billion by 2030.

 

 

Strong Research And Development (R&D) Ecosystem

India boasts a robust R&D ecosystem, with research institutions, universities, and start-ups dedicated to drone technology. Institutions such as the Indian Institutes of Technology (IITs) and the Defence Research and Development rganization (DRDO) have been at the forefront of drone R&D in India, driving advancements in flight performance, battery life, and payload capacity.

 Collaborations between academia, industry, and government agencies have led to significant breakthroughs in drone technology. Start-ups focused on drone technology have also emerged, contributing to innovation and entrepreneurship in the industry.

 

Cost-Effective Solutions

• Indian drone manufacturers have gained recognition for providing cost-effective solutions in the global market.This can be attributed to several factors. Firstly, India’s strong manufacturing base and skilled workforce enable efficient production processes and cost optimization. The availability of skilled labour at competitive wages helps keep manufacturing costs in check, allowing Indian manufacturers to offer affordable yet reliable drone solutions. 

• Secondly, the supportive ecosystem in India fosters innovation and entrepreneurship. Government initiatives like the Make in India campaign provide incentives and support or domestic manufacturing, driving cost efficiencies. Access to funding, tax incentives, and infrastructure development further contribute to the cost-effectiveness of Indian drone solutions.

Strategic Geographical Advantage 

India’s geographical location provides a strategic advantage for drone exports. Situated in South Asia, India serves as a gateway to markets in Asia,the Middle East, and Africa. Proximity to major Asian markets enables efficient transportation and reducedlogistical costs for Indian drone manufacturers. Additionally, India’s location near the Middle East and Africa presents significant export opportunities, as these regions are experiencing rapid economic growth and a growing demand for drones.

Overall, the Indian drone industry is poised for higher and sustainable growth. India and Indian companies have distinctive and sustainable advantage, which will over aperiod of time reflect in their scale and earnings.

 

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