Civil aviation ministry has invited applications from the drone industry for production-linked incentive scheme related to the sector. Interested manufacturers have been asked to file their applications for the scheme by March 31, 2022. The scheme covers manufacturers of drones and drone components, as well as developers of drone-related software.
Centre had approved the production-linked incentive (PLI) scheme on September 15, 2021, and the same was notified on September 20, 2021.
The total incentive to be extended under the scheme is ₹120 crore, spread over three financial years, starting from financial year 2021-22. This outlay is nearly double the combined turnover of all domestic drone manufacturers in FY21, Ministry of Civil Aviation said in a statement. The aviation ministry had earlier informed that ₹16 crore in the first year of the scheme, ₹32 crore in the second year and ₹72 crore in the last year.
The PLI rate for drones and drone components is 20% of the value addition, one of the highest among PLI schemes. As per the ministry guidelines, the value addition will be calculated as the annual sales revenue from drones and drone components (net of GST) minus the purchase cost (net of GST). The PLI rate will remain constant at 20% for all three years of the scheme, a facility granted only to the drone industry. In PLI schemes for other sectors, the PLI rate reduces every year.
The minimum value addition norm has been fixed at 40% of net sales for drones and drone components instead of 50%. Eligibility norm for MSME and startups in terms of annual sales turnover has been pegged at ₹2 crore for drone manufacturers and ₹50 lakh for drone components makers. For non-MSME companies, the annual turnover threshold has been kept at ₹4 crore and ₹1 crore for drones and drone component manufacturers, respectively. 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 after making up the shortfall. These measures have been put in place to attract more manufacturers to enrol under the scheme.
More than one company within a group may file separate applications under this PLI scheme and the same shall be evaluated independently. However, the total PLI payable to all applicants will be capped at 25% of the total financial outlay under this scheme, the aviation ministry clarified.
The PLI scheme for the drone industry covers airframe, propulsion systems (engine and electric), power systems, batteries and associated components, launch and recovery systems, inertial measurement units, inertial navigation systems, flight control module, ground control station and associated components. Communications systems like radio equipment, transponders, etc., cameras, sensors, spraying systems and related payload, etc. have also been brought under the ambit of the scheme. Detect and avoid systems, emergency recovery systems, trackers and other components critical for safety and security of the drones will also be covered by the PLI scheme. This list of eligible components may be expanded in the future with the advancement of drone technology.
