The Union government on Wednesday approved a production-linked incentive (PLI) scheme for drones and drone components with an allocation of Rs 120 crore spread over three financial years, the civil aviation ministry said. “The incentive for a manufacturer of drones and drone components shall be as high as 20 per cent of the value addition made by her,” the ministry’s statement noted.

The value addition should be calculated as the annual sales revenue from drones and drone components (net of GST) minus the purchase cost (net of GST) of drone and drone components, it stated.

The Centre has agreed to keep the PLI rate constant at 20 per cent for all three years, an exceptional treatment given only to the drone industry, it said, adding that this rate reduces every year in the PLI schemes for other sectors.

The PLI scheme comes as a follow-through of the liberalised Drone Rules, 2021, released by the Centre on August 25.

Both — the scheme and the rules — are intended to catalyse “super-normal growth” in the drone sector, the ministry mentioned.

Under Drone Rules, 2021, the number of forms that need to be filled to operate drones have been reduced from 25 to five and the types of fees charged from the operator have been decreased from 72 to four.

The aforementioned amount of Rs 120 crore is nearly double the combined turnover of all domestic drone manufacturers in 2020-21.

“The government has agreed to fix the minimum value addition norm at 40 per cent of net sales for drones and drone components instead of 50 per cent, another exceptional treatment given to the drone industry. This will allow widening the number of beneficiaries,” the ministry said.

Moreover, the Centre has kept the eligibility norm for MSME and startups in terms of annual sales turnover at a nominal level — Rs 2 crore (for drones) and Rs 50 lakh (for drone components) — to widen the number of beneficiaries, it mentioned.

The PLI scheme covers a wide variety of drone components, including airframe, propulsion systems, power systems, batteries, inertial measurement unit, flight control module, ground control station, communication systems, cameras, sensors, spraying systems, emergency recovery system and trackers, it noted.

“The list of eligible components may be expanded by the government from time to time, as the drone technology evolves,” it mentioned.

The PLI for a manufacturer shall be capped at 25 per cent of its total annual outlay so as to widen the number of the scheme’s beneficiaries, it stated.

“The government has agreed to widen the coverage of the incentive scheme to include developers of drone-related IT products also,” it noted.

The PLI scheme for drone industry is part of the overall announcement of PLI schemes for 13 sectors made earlier during the Union Budget 2021-22, with an outlay of Rs 1.97 lakh crore.

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