NEW DELHI: The government on Wednesday approved a production-linked incentive (PLI) scheme for drones and drone components.
Together with the liberalised drone rule enacted last month, the aviation ministry expects drone manufacturing to attract investment of over Rs 5,000 crore in the next three years, generating over 10,000 direct jobs over the next three years.
The ministry expects the annual sales turnover of the drone manufacturing industry to grow from Rs 60 crore in 2020-21 to over Rs 900 crore in FY 2023-24.
The PLI scheme allocates Rs 120 crore for drones and drone components spread over three financial years — almost twice the combined turnover of all domestic drone manufacturers in FY 2020-21. The incentive for a manufacturer of drones and drone components will 20% of the value addition.
The PLI rate at a constant 20% for all three years is an exceptional treatment given only to the drone industry. In PLI schemes for other sectors, the PLI rate reduces every year.
The government has kept the eligibility norm for MSME and startups in terms of annual sales turnover at Rs 2 crore (for drones) and Rs 50 lakhs (for drone components).
The eligibility norm for non-MSME companies in terms of annual sales turnover has been kept at Rs 4 crore (for drones) and Rs 1 crore (for drone components).
The proposed tenure of the PLI scheme is three years starting in FY 2021-22. The PLI scheme will be extended or redrafted after studying its impact in consultation with the industry.
“The Government has agreed to fix the minimum value addition norm at 40% of net sales for drones and drone components instead of 50%, another exceptional treatment given to the drone industry. This will allow widening the number of beneficiaries,” the ministry said in a statement.
The PLI scheme covers a variety of drone components:
- Airframe, propulsion systems(engine and electric), power systems, batteries and associated components, launch and recovery systems.
- Inertial Measurement Unit, Inertial Navigation System, flight control module, ground control station and associated components.
- Communications systems (radio frequency, transponders, satellite-based etc.)
- Cameras, sensors, spraying systems, and related payload, etc.
- ‘Detect and Avoid’ system, emergency recovery system, trackers, etc., and other components critical for safety and security.
“The incentive payable to a manufacturer of drones and drone components shall be simply one-fifth of value addition. PLI for a manufacturer shall be capped at 25% of the total annual outlay. In case manufacturers fails to meet the threshold for the eligible value addition for a particular financial year, they will be allowed to claim the lost incentive in the subsequent year if they make up the shortfall in the subsequent year,” the government statement says.