Exclusive: Government exploring plans for service-linked incentive for drone sector

Representative image.

Nearly a year after the government came out with a production-linked incentive (PLI) scheme for drone manufacturers, the government is looking towards furthering the drone-as-a-service sector with a possible service-linked incentive scheme.

This could be beneficial for the drone-as-a-service (DRaaS) industry which recently has been touted to become a Rs 30,000 crore sector over three years by Minister of Civil Aviation Jyotiraditya Scindia.

States are increasingly looking to use drones for services such as land mapping, maintaining power transmission lines, delivering medicines and deploying these unmanned flying vehicles for crowd control as well as disaster relief such as floods.

A senior government official said that the government is planning on providing a cash subsidy, similar to the PLI scheme. Stakeholders have been asked to set up the modalities of this proposed scheme within two weeks.

Although in its initial phase, government officials envision the structure like this —

State government will collate bills for drones services provided by various service providers for departments. The bills, which would have the details of its usages, would have to be endorsed by the Chief Minister’s Office.

After that, the bill will be sent to the Civil Aviation Ministry which will then review the bill, and send it to the Finance Ministry, according to the government’s initial plans. The service providers will receive the cashback from the Finance Ministry.

However, government officials are wary of the possibility of frauds being perpetrated by players.

“Just like the PLI scheme, this too will likely be linked to the GST. Because then, if some service provider puts a Ponzi bill, the entire force of the government will be on the one or two persons who may have tried to game the system,” an official said.

The demand for service-linked incentive in the drone industry has been a long-pending one.

Speaking to Moneycontrol, Smit Shah, president of Drone of Federation of India (DFI), said, “Apart from the service-linked incentive model that is being envisioned, sensitisation programmes to various states and stakeholders on opting for drone services and creating certain frameworks for procuring of DRaaS should also be explored.”

On July 25, Moneycontrol reported how the Union government initiated a process of creating guidelines for procuring drone services for government projects and initiatives.

“As we move forward, the preference of the customer would shift towards a lease model for procuring equipment- or imagery-as-a-service,” Avdhesh Khaitan, founder and CEO of Kadet Defence Systems, told Moneycontrol.

Khaitan said Kadet Defence Systems has been exporting threat-as-a-service, used for air defence training and weapon system evaluation.

“Incentives from the government for this business model would further enhance the competitiveness of the Indian industry in global markets where we face predatory pricing from Chinese State-owned enterprises,” Khaitan added.

Agnishwar Jayaprakash, CEO and founder of Chennai-based Garuda Aerospace, said, “ With 95 percent of our $2 million (Rs 16 crore) in FY22 revenues having come from drone-based services, Garuda Aerospace would greatly benefit from service-linked incentives.”