Press release

6 Sep 2022 New Delhi, IN

Drone industry to boost the manufacturing potential in India to ~US$ 23 billion by 2030: EY-FICCI report

New Delhi, 6 September 2022. Drone industry to boost the manufacturing potential in India to ~US$ 23 billion by 2030 according to the EY-FICCI report

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  • High-quality products and reducing dependence on imports to propel ‘Aatmanirbhar Bharat’ initiatives.
  • A strong collaborative approach between government, private sector, and startups is needed to make India the drone hub of the world.
  • Create an environment that encourages R&D, rewards innovation, and creates Indian IP ownership along with a financing mechanism to support start-ups or MSME companies working in the sector. 

New Delhi, 6 September 2022: The drone and its components industry can significantly strengthen India's manufacturing potential to US$ 23 billion approximately by 2030, according to the latest EY - FICCI report titled, “Making India the drone hub of the world”. Additionally, strong action plans are needed to create a robust demand, boost manufacturing, attract investments and facilitate exports to make India the drone hub of the world by 2030, offering the most competitive and innovative manufacturing capabilities.

Further, the EY-FICCI report suggests a collaborative approach for ministries to synergize their efforts to ensure rapid progress along with encouraging startups and supporting organizations, for the industry to scale up. The report also elaborates on how drones are increasingly finding potential to be employed in multiple use cases across infrastructure, retail, agriculture, homeland security, and many other sectors. 

Speaking at the launch of the report, Akshya Singhal, Consulting Partner - Government and Public Sector, EY India said, “Given the parameters of the Aatmanirbhar Bharat Abhiyan, a strong case exists for India to emerge as a global powerhouse in drones, as a tremendous demand for drones and drone-as-a-service gets created. The drone value chain spans manufacturing and value-added service components, impacting a large spectrum of industries and end-users. Via our report, we recommend critical steps required to capture 25% of the global drone market share through exports from India.”

Ankit Mehta, Co-chair of the FICCI Committee on drones, said, “Making India a drone manufacturing power would contribute to the country’s target of a US$ 5 trillion economy with a larger focus on the Make in India opportunity, and once delivered, its success will contribute to national prosperity across multiple sectors. A strong case exists for a symbiotic relationship between the government and industry to realize our vision to make India the drone hub of the world by the year 2030. This report explores how the government, in conjunction with the industry, could realize that vision and we hope that it will offer important and useful insights for all stakeholders.”

Key highlights of the report

  • Impetus on manufacturing: The total manufacturing potential of drones and their components in India by 2030 is approximately US$ 23 billion. In the short term, strong opportunities exist for the localisation of components like batteries, airframes and motors.
  • Support from different ministries: The report suggests that the Ministry of Defence must allocate between 5 to 10% of the defence capital budget for procurement of drones on new purchases and upgradation of the existing drone fleet (excluding MRO services). The Ministry of Urban Development can also suggest drone-enabled solutions to be included within the smart city framework recommended and implemented under the AMRUT mission. Drone adoption should be encouraged under central schemes like the Nirbhaya scheme and specific allocation for drone procurement under the Police Modernization budget by the Ministry of Home Affairs. 
  • Constitution of an Inter-Ministerial Committee: The report also suggests setting up an Inter-Ministerial Committee (IMC) with representation from all the concerned ministries/departments dealing with the drone and counter-drone sector. The IMC should discuss all the issues including innovation, technology development, regulations, mother technology development, global value chains, testing, skill development, training, global standards, reciprocity issues, and customs duties to make this sector globally competitive.
  • Financing: Financial institutions should provide collateral-free and personal-guarantee-free project finance loans at low-interest rates to start-ups or MSME companies that have received confirmed government or private sector orders, to enable them to fulfill orders. Further, similar loans can be given to organizations seeking to invest in testing and manufacturing infrastructure in this sector. This would boost the capital-intensive requirements in drone manufacturing. 
  • Streamlining the SCOMET licensing system: There is a need for the government to resolve ambiguities arising from the categorisation of drones in multiple categories (‘Munitions’-6A010, ‘Special materials’- 8A912 and ‘Unmanned Aerial Vehicles’- 5-5B) in the Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) licensing regime.
  • Representation on the global stage: Taking drones abroad for international exhibitions/demonstrations is cumbersome and lengthy, thus hampering international marketing activities for Indian manufacturers. A simplified procedure by the Directorate General of Foreign Trade (DGFT) is the need of the hour.
  • Funding: The government can provide innovation funding for strategic and high-risk technologies and innovations and invest to build Indian ecosystem players and a dedicated fund to provide grants for research in drone-enabled technologies and policies.
  • Skill and academic development: The skilling costs for training and development of human resources must be subsidized. Research, development, manufacturing, and services-related curriculums in IITs, Rajiv Gandhi National Aviation University (RGNAU) and other academic institutions, must be formulated.
  • Localization of components: The industry, in turn, would actively pursue avenues to increase the localization content of components and value addition, with government support. Special emphasis on batteries, carbon fiber and motors would yield substantive dividends. 

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