Explained | How the government's new draft policy will affect the adoption of drones in India?

The Ministry of Civil Aviation on July 15 released the updated draft Drone Rules, 2021 for public consultation, which will soon replace the UAS (unmanned aircraft system) Rules 2021 that was released on March 12.

As part of the new rules, the government has abolished the need for a drone licence for some criteria, reduced the number of forms required to own a drone in the country from 25 to six, and made it easy to grant permission to obtain a licence and operate a drone.

The government also cut the fees required to obtain a drone operating licence and removed the criteria where fees were linked to the size of the drone.

Furthermore, limitations on drone operations by foreign-owned enterprises registered in India have also been eased by removing the requirement for a pilot licence for micro drones (for non-commercial usage), nano drones, and research and development organisations.

The government has also said that a digital sky platform will also be developed which will help customers get permission for registration and operation of drones. The draft Drone Rules also state that an interactive airspace map with green, yellow, and red zones will be displayed on the digital sky platform.

But how do the government's steps affect the adoption of drones in the country?

Benefits of the new policy

The central government expects the new set of rules to increase the sales of drones in the country and create a market for drones in India.

"In order for India to have companies in private and public sector manufacturing drones across categories, there also needs to be a robust domestic market, whether for personal use or commercial use, civilian or military application. That is the aim of the new drone policy," a senior government official told Moneycontrol.

This sentiment is echoed by industry participants and market experts, who expect the new policy to boost commercial sales of drones in India.

The Drone Federation of India said that the government's move to relax drone norms is a bold approach to promote the use of drones and focus on the development of counter-drone technology in India.

"The new proposed rules are likely to boost the domestic adoption of drones in India for personal use and is expected to boost the size of the country's drone market in the coming years," a market expert working for one of the top four consulting firms told Moneycontrol.

He added that the urban population in India currently makes up nearly 85-90 percent of the Indian drone market, and the government's move to ease operations of drones in the urban area is expected to boost sales of drones to enthusiasts.

Furthermore, the adoption of drones in R&D is also expected to boost the way for pilot projects in India that are likely to help the government come out with a policy for the commercial use of drones as well.

"The Indian Railways, National Highway Authority of India, along with many private companies are already working on pilot projects for the commercial use of drones. These projects will speed up the data required by the government in order to formulate a commercial drone policy," a market expert from one of the big four analyst firms said.

In 2019, the Directorate General of Civil Aviation had invited companies including Zomato, Swiggy, Tata Advanced Systems, Honeywell and Dunzo to participate in sandboxes for Beyond Visual Line of Sight pilot projects and test out their drones. But rejected 27 of the 34 applications it received due to incomplete information.

Challenges that still remain

While the Indian drone industry has been the fastest-growing global market since drones were legalized in the country in 2018, the overall size of the Indian market is much smaller when compared to global markets.

"The Indian unmanned aerial vehicle market is expected to reach $1.8 billion by 2025-26 growing at a CAGR of 14.61 percent; it would only make up less than 3 percent of the world market which is estimated at $63.6 billion by 2025," a market expert from Golden Sach said.

In case India is looking to become a global manufacturing hub for drones, the industry is looking for a lot more clarity on the timelines on permissions to operate commercial drones, as well as the permissions where drones will be allowed to operate.

"The government in the new draft rules said new drone corridors will be developed for cargo deliveries and a drone promotion council will be set up to facilitate a business-friendly regulatory regime, but has not given a timeline for the same. With the use of drones already a growing reality in many countries, the government should look at fast-tracking these processes to not fall behind in the global drone industry," a domestic drone manufacturer told Moneycontrol.

Currently in India drones are not being permitted in densely populated urban areas because safety and privacy issues remain.

While the government is currently testing out different pilot projects for the use of drones in services like delivery of products, surveillance, and even agriculture, an official from the Directorate General of Civil Aviation said a policy based on the feedback is still in the works.

The industry is also likely to wait for more clarity on the taxation rate of drones and has requested the government to attract and promote foreign direct investment in order to supplement domestic capital, technology and skills for accelerated economic growth.

The market expert from Goldman Sachs said that the domestic UAV market will see a significant boost if it is adopted in the country's agriculture sector. However, given the fragmented nature of India's agriculture sector, the challenges of educating Indian farmers remain a major challenge for the government.

Another major issue surrounding the Indian drone market is the dependence on imports for drone components.

“Many drones are imported or assembled in India with foreign components. It takes years to build a domestic supply chain like in automotive or consumer durables,” the DGCA official pointed out.