India is on the fast track to emerging as a global hub of drone manufacturing as the use of UAVs across sectors in the economy is increasing multifold
BY KUMUD DAS
The Indian drone industry is increasingly showing promise for use across a variety of industries, including infrastructure, retail, agriculture, internal security, defence and so on. As per a recent Ernst & Young (EY)-Federation of Indian Chambers of Commerce and Industry (FICCI) report, drones and component industries can boost India’s manufacturing potential to approximately $23 billion by 2030. The report emphasises the need for innovative and competitive manufacturing capabilities and for a strong action plan to help India become an international focal point for drone manufacture by 2030. It also highlights the importance of generating strong demand, increasing manufacturing, drawing investments and facilitating exports. The study has recommended a cooperative strategy for ministries to coordinate their efforts and assure quick advancement in addition to helping organisations and startups.
According to Akshya Singhal, consulting partner – government and public sector, EY India, “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 percent of the global drone market share through exports from India.”
Not to mention that making India a drone manufacturing power would contribute to the country’s target of a $5 trillion economy with a larger focus on the Make in India opportunity and, once delivered, its success would contribute to national prosperity across multiple sectors.
“A strong case exists for a symbiotic relationship between the government and industry to realise our vision to make India the drone hub of the world by 2030,” says Ankit Mehta, co-chair, FICCI Committee on Drones.
In fact, strong potential exists for India to emerge as a global powerhouse in drones, as there would be tremendous demand for drone services, and also a thrust on manufacturing. This coming of drones to Indian skies is eagerly awaited, much like a ‘second coming’, after the internet and GPS technologies that have revolutionised the Indian marketplace.
Drones offer aerial thermal inspection, aerial visual inspection, construction monitoring, incident response, e-commerce delivery, warehouse inventory management, intelligence, surveillance and reconnaissance missions, and also function as loitering munitions and target drones. India’s drone story will have a trickle-down effect across multiple sectors, and thus has the potential to alter the Indian marketplace.
The commercial application of drones came into the spotlight only after 2013, when Amazon announced its intention to exploit drones for delivery of goods. Today, as drone technology pans out and finds widespread application, it will have a ubiquitous impact on a scale rivalling that of the internet or GPS. Drone technology is a sunrise sector, poised for exponential boom worldwide. India finds itself at a critical juncture in the evolutionary timeline of drone technology, wherein we have a time-critical window of one to two years to internalise and capitalise on technology to emerge as the drone manufacturing centre of the world.
The Atmanirbhar Bharat Abhiyan aims to cut down import dependence by focusing on substitution while improving the quality and safety standards of Made in India products to enter the global value chain. It is a programme to project India in the global market and gain a significant position.
As per analyst estimates, India has the unique opportunity to realise approximately ₹1.8 lakh crore of aggregate domestic manufacturing potential through focused implementation of drone indigenisation projects, across defence, commercial, internal security and counter UAV sectors. Analysts expect a Compounded Annual Growth Rate (CAGR) of 80 percent in 2020 to 2025, followed by a CAGR of 35 percent in 2025 to 2030.
The rise of the drone manufacturing industry in India will result in significant manufacturing trickle-down effects across the subcomponent value chain, right across motors/propulsion systems, payloads, communication modules, batteries/power systems, propellers, assembly, navigation systems and airframes. These subcomponents have commonalities and synergies with allied industries, which in turn would get a fillip.
The commercial sector largely comprises infrastructure, retail and agriculture. Taken together with internal security, it is estimated that there exists a manufacturing potential of ₹98,000 crore across fixedwing and multi-rotor drones by 2030. The manufacturing demand for the subcomponents
of these drones would find extant commonalities and synergies with multiple industries.
India has introduced market regulations and policy interventions addressing both the demand side (through drone policy) and the supply side (though Production-Linked Incentives and import bans). The rest of the world will catch up subsequently in terms of this regulatory ecosystem and the drone market will rapidly grow worldwide, but India has a unique advantage right now.
Investments in startups indicate significant global interest in both the manufacturing and the value addition services sides of the spectrum. Analysts estimate that up to 55 percent of Private Equity (PE) investments worldwide occur in the manufacturing side, and approximately 45 percent in the value-added services side.
The government’s role as a facilitator has the potential to expand demand to approximately ₹75,000 crore in the commercial sector, and ₹23,000 crore in the internal security sector. As much as 60 percent of the commercial manufacturing potential will be realised from governmentdominated sectors.
It is estimated that 5-10 percent of the security budget will be allocated for procurement of new drones as well as upgradation of the existing fleet. The Ministry of Home Affairs is likely to allocate a budget for drones in central schemes like the ‘Nirbhaya scheme’. However, specific allocation for drone procurement under the police modernisation budget will act as a force multiplier for the law enforcement agencies.
Interestingly, the recently promulgated Drone Policy of the Gujarat government aims to create 25,000 jobs in the drone sector and envisions enhanced drone usage through targeted interventions by various departments in a wide array of fields, including monitoring vehicle emissions, counting lions in forests, spraying pesticides, sowing seeds and supplying medical items. Drone testing infrastructure is a critical part of the innovation infrastructure, as it provides a safe space for drone manufacturers and researchers to test technologies in realworld scenarios.
The writer is a Mumbai-based senior business journalist