Production Linked Incentive: DRONE SCHEME 2021

Policy Update
Christeena Sabu

Drones are also known as remotely piloted aerial systems (RPAS) or unmanned aerial vehicles (UAVs), and they can be operated by technology or by a pilot on the ground. Almost every industry can profit greatly from drone use, including mining, agriculture, emergency response, transportation, geospatial mapping, defense, and law enforcement. Because of their reach, adaptability, and simplicity of use, drones have the potential to significantly contribute to job creation and economic growth, especially in India’s remote and inaccessible areas. India has the potential to become a global powerhouse for drone technology by 2030 due to its historical strengths in innovation, information technology, economic engineering, and high domestic demand.

The Drone Scheme is a scheme under the Production-Linked Incentive (PLI) Scheme that was launched on September 30, 2021, and was aimed to promote the manufacturing of drones and drone components in India. Under the scheme, manufacturers of drones and drone components in India will receive an incentive of Rs. 120 crore, which will be based on their value addition in the country. This value addition will be determined by deducting the purchase cost (net of GST) from the annual sales revenue (net of drones and drone components). 


The application of the PLI scheme for drones is stretched over the span of three years starting from FY 2021-22. The PLI that a manufacturer can claim is 20% of the value addition by such a manufacturer. The rate is constant at 20% over the three years. It also requires the minimum value addition to be 40% of net sales. Micro, Small, and Medium-Sized Enterprises (MSME) and startups must meet the qualifying requirements for the drone plan, which are Rs. 2 crore for drone manufacturers and Rs. 50 lakhs for drone component manufacturers in terms of annual sales income.

To encourage a wider range of beneficiaries, PLI is capped at 25% of the total yearly outlay for each beneficiary. Manufacturers who fall short of the acceptable value addition threshold for a given fiscal year may be eligible to collect the incentive they lost, provided they make up the difference in the next year. The incentive under the PLI scheme applies only to domestic value addition encouraging manufacturers to reduce imports and go for higher capacity building and value addition in the sector.

Objective of the Scheme

The Drone Scheme aims to create a robust domestic drone manufacturing industry. The scheme stressed changing the existing framework’s perspective of drones from that of a potential threat to an opportunity. Over the recent years, India has made significant usage of drones in various sectors ranging from agriculture to railways. To survey the inhabited villages included in the “SVAMITVA” scheme, drones are used. Moreover, a surveillance system based on Drones was introduced in India concerning Railway security.

India deployed drones to deliver COVID-19 vaccines in states including Manipur, Nagaland, Andamans and Nicobar Islands. Thus drones act as an immediate and efficient way to save time in various cases. Since the government is the sector that could benefit from drones the most, it is considered to have the potential to be an early user and major adopter.

The Board of Control for Cricket in India (BCCI) has been given a conditional exemption by the Ministry of Civil Aviation (MoCA) and the Directorate General of Civil Aviation (DGCA) to use drones for live aerial filming during the 2021 India Cricket Season. Drones also have major use in the defense sector. The Defense Research and Development Organization (DRDO) in India has launched a national program for the development of unmanned aerial vehicles (UAVs) and unmanned aircraft systems (UAS). This project aims to create domestic weaponry that can replace or supplement the existing generation of unmanned vehicles. 

By promoting ease of doing business the scheme focuses on liberalising the drone industry while ensuring safety and security. It also stresses capital infusion and attracting investors into the drone industry.


The Drone Scheme holds the potential to revolutionalise the drone ecosystem in India, as it is expected to reduce bureaucratic discrepancies, promote ease of use, ensure safety and security, and foster innovation and growth in the Drone Industry.

The scheme is the one which is based on trust, self-certification, and non-intrusive monitoring, allowing drone operators to self-regulate, simultaneously ensuring compliance with safety and security standards.

To facilitate unmanned traffic management, the Digital Sky Platform, a user-friendly and single window system was released which provides swift (online) authorizations for operators for each flight, as well as facilitates the licensing and registration of drones and operators. 

Under this scheme the number of forms required to be filled has been reduced from 25 to 5, moreover, the types of fees reduced from 72 to 4. Several approvals that were required earlier to manufacture drones or drone components in India have been abolished and the fee on the size of drones has been delinked. The plan optimizes the legal framework governing drone operations. Operators now find it simpler to adhere to guidelines and secure required authorization. The maximum penalty has also been reduced.

By streamlining regulations and reducing administrative burdens, it encourages more individuals and businesses to adopt drone technology. Hence the scheme aims to foster super-normal growth in the drone industry while simultaneously balancing safety and security concerns. The scheme includes provisions such as interactive air space maps, zone differentiation based on risk levels, and reduced requirements for certain types of operations in green zones ensuring safety and responsible use of drones.   The scheme also includes safety and security features such as  No Permission – No Takeoff'(NPNT), real-time tracking beacons, and geo-fencing etc.

The scheme allows manufacturers and importers to generate identification numbers through self-certification emphasing on the importance of the unique identification of drones. The scheme encourages innovation in drone technology by reducing barriers to entry and promoting a conducive regulatory environment for drone manufacturing.There are further plans for the development of drone corridors for cargo delivery. The establishment of a drone council with various members from academia, startups, and other stakeholders indicates the fostering of a collaborative environment to promote industry growth.If implemented successfully this scheme has the scope to improve the growth and competitiveness of the Indian Drone Industry.


Within one year of the scheme’s implementation, the drone industry’s revenue plummeted from INR 88 Crores in FY 2020-21 to INR 319 crores in FY 2021-22.By liberalising the drone industry the scheme is expected to attract over 5000 crores worth of investment in drone and component manufacturing within the year 2025.An increase in investment implies a potential for job creation due to the income effect, which is essential for a country like India with a large workforce. Over 10,000 direct and 1 lakh indirect jobs are forecasted to be created by 2025. 

Until now 4200 drones have been successfully registered under the Digital Sky platform. Drones were used to survey more than 1,90,000 settlements as part of the SVAMITVA program to create land entitlement records.

Over 1400 drone operators have received training from 35 DGCA-approved drone training institutions nationwide. In the states of Punjab, Rajasthan, and Haryana, locust infestations were managed with the deployment of drones.Critical medication delivery by drones has been implemented in Maharashtra, Telangana, Himachal Pradesh, Meghalaya, and Manipur states. Almost all union ministries and state governments use drones for project monitoring and good governance.

Emerging Issues

However this scheme is not a bed of roses, like every scheme, the Drone Policy 2021 also has its own limitations. India does not produce several delicate drone parts, including radio frequency modules, remote controllers, autopilots, high-capacity batteries, and avionics. Since importing essential components from overseas requires an industrial licence under existing laws, their unavailability is an important concern because the import procedure is costly and time-consuming. This hurts India’s research and logistics for different drones.

Furthermore, installing sensors within the drone is necessary for nighttime emergency missions involving the delivery of medical supplies. Therefore, either the production process should be started for effective drone operations in the healthcare, agriculture, and logistics sectors, or the rules should make it easier to import these sensors.

Batteries are an essential component in drones that supply power to all of the internal parts. Comparing the power, energy, weight, cost, safety, and maintenance of various battery sets for drones will help in choosing the right one. For drones carrying medical supplies, weight and discharge rate—also known as a “C” rating—should be taken into account in addition to voltage and capacity. Batteries dying in midair could result in forced landings in unexpected locations where drone recovery could be difficult and leaks during the delivery of medical supplies using drones could raise ethical questions. 

Long-distance medical supply transportation requires low-weight and high-capacity batteries.A legitimate third-party insurance policy is needed for drone operation in India, as per Drone Rules-2021. Currently, limited insurance firms provide coverage for personal accidents, third-party liability exposure, and protection against damage to the drone. However, the full paperwork and insurance-securing process is currently time-consuming.

Way Forward

The drone industry holds significant economic potential and can foster job and revenue creation, and technological improvements. The drone policy can lead to the expansion of the commercial drone sectors other than just defence especially in areas such as infrastructure, aerial photography, e-commerce, and agriculture. By improving efficiency, drones can enhance business opportunities, reduce logistical limitations, and increase productivity. Building a strong drone ecosystem can draw funding, encourage innovation, and help new services and business models to emerge.

Implementation of drone technology can benefit the environment by minimizing the carbon footprint of conventional data collection and delivery techniques. Precision farming methods, which reduce the need for fertilizer and pesticides and maximize resource efficiency, are made possible by drone technology.

It can aid disaster management, wildlife protection, and environmental monitoring. In potentially dangerous situations, they can provide useful data without requiring human action. Drone laws support sustainable practices and conservation initiatives by incentivizing eco-friendly applications.

Despite the said advantages and the scope held by drone technology lack of public awareness and comprehension of those regulations and their ramifications can lead to its hampering. Many people might be unaware of the guidelines and limitations of drone operations, which could result in inadvertent breaches. To close this knowledge gap and make sure that drone operators and the general public are informed of their rights and obligations as well as the possible risks and benefits of drone technology, public education campaigns, awareness initiatives, and freely accessible data resources can be helpful.Drone-related privacy and security vulnerabilities make enforcing regulations highly challenging.

Drones with cameras and other sensors can record private information and violate people’s right to privacy. It is a difficult effort to strike a balance between the necessity of drone operations and privacy protection. Hence specific policies and procedures to handle privacy concerns are needed. Managing privacy and security drone issues requires strong data protection protocols, encryption methods, and policies on data usage and storage.International harmonization of legislation is necessary because drone operations frequently cross national borders.

The various legislative frameworks that various nations have chosen can make it difficult to conduct cross-border drone operations and impede the expansion of the global drone market. To encourage harmonized drone regulations and enable smooth international operations, international cooperation and standardization initiatives, such as those started by international organizations like the International Civil Aviation Organization (ICAO) and the European Union Aviation Safety Agency (EASA), are crucial.

For the scheme to unleash its full potential, the limitations of the scheme up until now need to be gauged. This can be done by surveying the current beneficiaries of the scheme. Policymakers can also analyse countries with similar drone policies and quantify their successes and failures. The ban on foreign drone imports could result in a decrease in the competitiveness of Indian drones. Technological advancements and significant amounts need to be made in the research and development of drones to ensure that Indian drones are at par with foreign drones. Exciting developments and prospects await India’s drone law. Including cutting-edge technology like AI and automation can enhance drone capabilities and effectiveness.


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Christeena Sabu is a Research Intern at IMPRI and currently pursuing B.A.  Economics Honours from  Jesus and Mary College, University of Delhi.

AcknowledgmentThe author would like to thank Dr. Arjun Kumar,  Aasthaba Jadeja, and Ankita for sharing their critical observations, kind comments, and insightful suggestions to improve the article.

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This article was posted by Christeena Sabu, a research intern at IMPRI.