Drone Imports Ban and Boosting Indigenous Drone Manufacturing – Explained, pointwise

Introduction

The Directorate General of Foreign Trade, under the Ministry of Commerce and Industry, has issued an order prohibiting drone imports in certain forms. Along with the production-linked incentive scheme for drones and drone components, the move is aimed to boost indigenous drone manufacturing, which is seen as a sector that is set to witness rapid growth this decade.

About the drone import ban in India

The ban applies to drones in Completely-Built-Up (CBU), Semi-knocked-down (SKD) or Completely-Knocked-down (CKD) forms. In the knocked-down form, the components of drones are imported separately and the final assembly is done after import.

The import of drones will be allowed for: (a) Government entities; (b) Educational institutions recognised by Central or State governments; (c) Government recognised R&D entities; (d) Drone manufacturers for R&D purposes as well as for defence and security purposes.

The order also says that the import of drone components is “free”, implying that no permission is needed from the DGFT allowing local manufacturers to import parts like diodes, chips, motors, lithium-ion batteries etc. This is expected to increase indigenous drone manufacturing.

Why has the Government decided to ban imports of drones?

Growth of drone manufacturing in India: The Government estimates that the drones and drone components manufacturing industry will attract investments of over Rs 50 billion over the next three years. The annual sales turnover of the drone manufacturing industry is expected to grow multifold from Rs 600 million in 2020-21 to over Rs 9 billion in FY 2023-24. During this period, the drone manufacturing industry is expected to generate over 10,000 direct jobs.

Cumulatively, the drone services industry is expected to grow to over Rs 300 billion in the next three years and generate over 500,000 jobs

Status of drone imports: At present, India imports drones from various countries e.g., (a) For defence needs, India imports drones from Israel and the U.S., (b) Consumer drones such as those used in wedding photography come from China; (c) Drones for light shows are imported from China as well as Russia.

At present, more than 90% of the Indian drone market is flooded by imported drones, the vast majority of them are Chinese which is a cause of concern for the Government.

What are the advantages associated with banning drone imports?

Boost indigenous drone manufacturing: Most drone manufacturers in India assemble imported components in India, and there is little manufacturing. Banning drone imports will benefit the local production and allow Indian drone startups to compete with one another.

Also, allowing imports of drone components will enhance the understanding and control of the product. Over a period of time, this will enable indigenisation.

Enhance data security: The vast majority of drone imports are from China. There is a risk of data and security breaches with the use of Chinese systems. With an import ban, the Indian manufacturers will have control of the IP, design and software. Hence, the ban will address the data security concerns associated with drones.

What are the challenges associated with banning drone imports?

Firstly, India does not have the manufacturing capacity to cut dependence on imports. So, banning drone imports will lead to a lot of disruption in terms of business and derail a lot of well-laid plans as 90% of the service providers in India are using imported drones.

Secondly, many foreign brands specially make drones for agricultural use. This would have helped with the Government’s Kisan drone initiatives. These too will now be restricted.

Thirdly, India does not have a supply chain for the local manufacturing of drones. Hence, schemes like PLI Scheme for drones and drone components to encourage local manufacturing will not have much impact.

Fourthly, it will increase the cost burden on companies, as imported drones are cheaper than locally assembled ones.

Fifthly, banning drone imports would be bad news for drone enthusiasts, who import them for photography, video and other leisurely activities.

What are the measures taken to promote indigenous drone manufacturing?

Liberalised Drone Rules, 2021: The Government brought out liberalised Drone Rules in 2021. This reduced the number of forms to be filled to seek authorisation from 25 to 5. Apart from that, the rules; (a) Dispensed with the need for security clearance before any registration or issuance of the licence, (b) R&D entities have been provided blanket exemption from all kinds of permissions; (c) Removed the restrictions on foreign-owned companies registered in India.

Drone Certification Scheme: The scheme was notified under Rule 7 of the liberalised Drone Rules, 2021. The scheme will help in simpler, faster and transparent type-certification of drones.

Single window Digital Sky Platform: It is the first-of-its-kind national unmanned traffic management (UTM) platform that implements “No Permission, No Takeoff” (NPNT). Users will be required to do a one-time registration of their drones, pilots and owners.

Production-linked incentive scheme for drones and drone components: The scheme aims to make India a “global drone hub by 2030”. It has allocated ₹120 crores for a period of three years, under which it will offer an incentive of 20% of the value addition made by a manufacturer of drones or drone components or drone-related IT products.

Apart from giving a boost to local manufacturers, the scheme will also encourage foreign manufacturers to set up assembly lines in India.

Promote drone use in agriculture: The guidelines of Sub-Mission on Agricultural Mechanization (SMAM) have been amended: (a) To provide a grant up to 100% of the cost of agriculture drone or Rs.10 lakhs, whichever is less; (b) Graduates establishing Custom Hiring Centre (CHC) will be eligible for subsidy up to 50% of the cost of the drone and associated equipment up to Rs 5 lakhs, etc.

What are the applications of drones in different domains?

Defence and Security: Surveillance, situational analysis, crime control, VVIP security, combat operations, communication in remote areas and counter-drone solutions.

Health sector: Delivery of medicines, collection of samples from remote or epidemic/pandemic-affected areas.

Environment: Anti-poaching actions, monitoring of forests and wildlife, pollution assessment, and evidence gathering.

Agriculture: Crop and soil health monitoring, anti-locust work, insurance claim survey, creation of Land Records and property rights.

Disaster management: Incidence response especially in fire accidents and disasters like Earth Quake, etc, rescue and recover missions, Monitoring and assessing damages, etc.

Law Enforcement: surveillance of large crowds and ensuring public safety, monitoring criminal and illegal activities.

Apart from that, drones offer high-quality videography of events in difficult-to-reach-places at a fraction of the cost, facilitate low altitude shooting without noise, and avert the risk of human accidents.

What should be done to promote indigenous drone manufacturing?

Provide support to local manufacturers: Though the first step has been taken by prohibiting the import of CBU and CKD drones, support should be provided to the local manufacturers at the component level in order to develop the full ecosystem.

Apart from that, the government has to: (a) Incentivise garage startups, micros, and small industries; (b) Provide access to high-quality and economically priced drone hardware; (c) Create a regulatory mechanism that favours and promotes Indian software to be used for all drone operations across sectors. This will make Indian software companies to become the Microsoft of the drone industry.

Increase Investments: India needs to invest in drone systems and counter-drone technologies to detect and track threats, especially around critical assets.

Create awareness about the pros and cons of drone use: The usage of drones is fairly a new concept in India. Hence, a lot of safety regulations have to be made mandatory for both manufacturers and users. Accidents can lead to negative campaigns, which eventually damage the industry. Government should create awareness about the pros and cons of drone use.

To realise the aim of becoming the world’s drone hub, India must establish the ecosystem, compete on a global scale with high-quality products and create indigenous software.

Source: Mint