PLI scheme for drone industry can be significant creators of employment and economic growth on account of their reach, versatility, and ease of use, especially in the country's remote and inaccessible areas.

The government invites applications from the drone industry for Production Linked Incentive (PLI). The last date for submitting an application is set on March 31, 2022. The PLI scheme which is a follow-through of the liberalised Drone Rules, 2021, is intended to catalyse super-normal growth in the upcoming drone sector. The scheme is also another step towards the government's Aatmanirbhar Bharat vission. The scheme for the drone industry offers notable benefits to almost all sectors in India and can be significant creators of employment and economic growth on account of their reach, versatility, and ease of use, especially in the country's remote and inaccessible areas.

Here are 10 key points of the PLI scheme for the drone industry:

1. The application form is of one page only, along with the certificate from the head of the organisation and the statutory auditor. Notably, more than one company within a Group of Companies may file separate applications under this PLI scheme and the same shall be evaluated independently. Although, the total PLI payable to such applicants shall be capped at 25% of the total financial outlay under this PLI scheme.

2. PLI scheme for the drone industry was notified in September 2021, with a total incentive is ₹ 120 crore spread over three financial years, which is nearly double the combined turnover of all domestic drone manufacturers in FY 2020-21.

3. For the drone industry, the PLI rate is 20% of the value addition, one of the highest among PLI schemes. The value addition shall 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.

4. The government has kept the PLI rate constant at 20% for three years - an exception given only for the drone industry. Simply put, the PLI rate in other sectors reduces every year.

5. Tenure of PLI scheme for the industry is proposed for 3 years starting from fiscal FY 2021-22. However, the scheme will be extended or redrafted after studying its impact in consultation with the industry.

6. For widening the number of beneficiaries, the Centre has fixed a minimum value addition norm of 40% of net sales for drones and drone components instead of 50%, another exceptional treatment given to the drone industry.

7. The Centre widened the coverage of the scheme to include developers of drone-related IT products also. PLI for a manufacturer is capped at 25% of the total annual outlay. 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 if she makes up the shortfall in the subsequent year.

7. Eligibility norm for MSME and startups in terms of annual sales turnover at a nominal level is kept at ₹ 2 crore (for drones) and ₹ 50 lakhs (for drone components). Meanwhile, the eligibility norm for non-MSME companies in terms of annual sales turnover has been kept at ₹ 4 crore (for drones) and ₹ 1 crore (for drone components).

8. The PLI scheme covers a wide variety of drone components. Such as - a) airframe, propulsion systems(engine and electric), power systems, batteries and associated components, launch and recovery systems; b) Inertial Measurement Unit, Inertial Navigation System, flight control module, ground control station and associated components; c) communications systems (radiofrequency, transponders, satellite-based etc.); d) cameras, sensors, spraying systems and related payload etc.; e) 'Detect and Avoid’ system, emergency recovery system, trackers etc. and other components critical for safety and security.

9. The incentive payable to a manufacturer of drones and drone components shall be one-fifth of his or her value addition.

10. Due to the new rules and the incentive scheme, the drones and drone components manufacturing industry may see an investment of over INR 5,000 crore over the next three years. The annual sales turnover of the drone manufacturing industry may grow from INR 60 crore in 2020-21 fold to over INR 900 crore in FY 2023-24. The drone manufacturing industry is expected to generate over 10,000 direct jobs over the next three years.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!

Log in to our website to save your bookmarks. It'll just take a moment.

Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.

Your session has expired, please login again.

You are now subscribed to our newsletters. In case you can’t find any email from our side, please check the spam folder.

This is a subscriber only feature Subscribe Now to get daily updates on WhatsApp