Drone segment gets off to a flying start in India

Nearly five of the investments happened this year, with three in May and one in June.

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As per Niti Aayog estimates, the domestic drone market is expected to grow to $50 billion over the next 15 years.

When star cricketer MS Dhoni scooped up a stake in drone startup Garuda Aerospace last week and turned its brand ambassador, he was only becoming the latest in a series of investors and entrepreneurs eyeing a pie of India’s widening drone horizons.

Buoyed by newer possibilities in industry and agriculture, and aided by favourable government policies, India’s drone segment is off to a flying start, attracting technology and new investments.

Mukesh Ambani-led Reliance Industries (RIL) was among the earliest to step into the game, buying an 83% stake in SankhyaSutra Labs, which develops high-fidelity aerodynamics and multiphysics simulation software, in 2019, and Asteria Aerospace, a full-stack drone-technology company, in 2021. In May this year, Gautam Adani-led Adani Enterprises entered into a deal to acquire a 50% stake in General Aeronautics, a Bengaluru-based drone maker, for an undisclosed sum.

DCM Shriram’s 2021 acquisition of a 30% stake in Turkish drone maker Zyrone Dynamics, RattanIndia Enterprises’ (REL) subsidiary NeoSky India buying a 60% stake in Throttle Aerospace Systems (TAS) in May this year, and companies including Infosys investing in Mumbai-based drone startup ideaForge Technology were among the other deals in the sector. Industry experts expect several more deals in India’s drone sector in the next six months.

“There are a lot of policy tailwinds that would give an impetus to the sector, such as the government’s policy to promote drones and make the country a global hub for drone manufacturing by 2030. Further, an import ban on drones by the Indian government, focus on clean technology and its use in sectors such as agriculture, and the proposed ‘Drone Shakti’ scheme, among others, will facilitate application and use of drone-as-a-service in the country,” Anjali Rattan Nashier, business chairperson at RattanIndia Enterprises (REL), said.

“The government’s proposals to provide incentives of Rs 120 crore under the Production Linked Incentive (PLI) scheme for three years for drones and components, the drone manufacturing industry expected to grow to about Rs 30,000 crore in the next three years and the sector expected to generate over 500,000 jobs, are all testimonies of the industry’s strong future,” she said, adding REL is scouting for more acquisitions.

In August 2021, REL made a strategic investment in US-based urban drone logistics platform Matternet.

“The demand for drones from the common man will come from ‘Kisan Drones’, which will be used for spraying pesticides across acres of crops, multiple times a year. Given the incentives on Kisan Drones — we could see tens of thousands of such drones being operated by the tech-savvy rural youth, who will be able to substantially uplift their livelihoods while enhancing crop yields,” Vivek Jhunjhunwala, partner at Deloitte India, said. “They will also play a part in maintaining and enhancing our agricultural production, enabling our infrastructure development, maintaining our energy-generating facilities, and guarding our mountains and coasts. The import of drones for R&D and defence is still allowed, and serious players with low volumes can evaluate that route,” Jhunjhunwala added.

As per Niti Aayog estimates, the domestic drone market is expected to grow to $50 billion over the next 15 years. Incentives including liberalisation of drone rules in 2021 and the PLI scheme to make India a global hub for drones by 2030 were also launched.

“India’s unmanned aerial vehicles (UAVs) market is estimated to be worth $1.81 billion by FY26, and 2022 will be a milestone in the widespread use and adoption of drones in the country. The government’s push towards the development and adoption of drone technology across industries, right from agriculture to land administration, is creating an excellent environment for the drone manufacturers, operators, service providers and users,” Agendra Kumar, MD at Esri India, said. Esri India, a geographic information systems solutions provider, also provides drone-mapping services. “Measures such as the New Drone Rules 2021, recent developments in the PLI scheme for drones, the Digital Sky Platform, and the Geospatial Data Guidelines 2021 are opening up new possibilities for innovation with drone technology,” he added.

Nearly five of the investments happened this year, with three in May and one in June.

‘“The government has taken serious initiatives to reduce dependence on imports, scale up production locally, attract large investments, drive job opportunities and increase the bottom-line of companies. Being a sunrise industry, this could potentially be the next IT or telecom sector of India, as private equity and venture capital firms are heavily betting on the space,” Throttle Aerospace founder & CEO Nagendran Kandasamy said.

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