PLI in drone manufacturing: Govt expects scheme to attract investments of Rs 5,000 crore in 3 years

The central government today announced a Production-Linked Incentive (PLI) scheme for the drone industry today that offers an incentive of 20% of the value addition made by a manufacturer of drones and drone components.

The government expects the incentive to see an investment of over Rs 5,000 crore over the next three years beginning current fiscal.

“The drones and drone components manufacturing industry may see an investment of over Rs 5,000 crore over the next three years. The annual sales turnover of the drone manufacturing industry may grow from Rs 60 crore in 2020-21 fold to over Rs 900 crore in FY 2023-24. The drone manufacturing industry is expected to generate over 10,000 direct jobs over the next three years,” the aviation ministry said in a statement.

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The government has allocated a total amount of Rs 120 crore for the PLI scheme for drones and drone components spread over three financial years. “This amount is nearly double the combined turnover of all domestic drone manufacturers in FY 2020-21,” the government said.

Explaining the PLI calculation method, the government said for a company – with a sales net of Rs 100 crore and purchase net of Rs 60 crore – PLI (rate of 20%) will be calculated on Rs 40 crore and will be eligible for a PLI of Rs 8 crore.

“In case a manufacturer fails to meet the threshold for the eligible value addition for a particular financial year, she will be allowed to claim the lost incentive in the subsequent year if she makes up the shortfall in the subsequent year,” read a government statement.

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The government has, in an exceptional treatment given only to the drone industry to promote drone manufacturing in the country, agreed to keep the PLI rate constant at 20% for all three years. In PLI schemes for other sectors, the PLI rate reduces every year, the aviation ministry said.

The government said that the scale in drone manufacturing is over and above the drone services industry (operations, logistics, data processing, traffic management etc.), which is expected to grow to over Rs 30,000 crore in next three years and generate over five lakh jobs in three years, the government added.

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