One year since PLI, government contracts lead growth for drone manufacturing

A year since the announcement of incentives for a fledgling drone manufacturing industry, stakeholders are seeing a rise in the number of drone projects being laid out by governments. Startups like Garuda Aerospace, Mumbai-based IdeaForge and Skye Air Mobility, which provide drones-as-a-service for such projects, are in turn stepping up manufacturing based on the larger demand.

For instance, Garuda Aerospace said it will have the capacity to build 100 drones per day by March 2023, which is double its current capacity. Agnishwar Jayaprakash, founder and chief executive of the firm, said that demand is already outpacing its supply. “We already have received 27,000 pre-bookings for drones, which are ready to be delivered by March next year. By end-2024, we aim to make up to 100,000 drones every year,” Jayaprakash said.

Similarly, IdeaForge received two contracts worth $20 million each, to make drones specifically for the Indian Army. Manufacturing of domestic drones was further augmented on August 8, when industry body Drone Federation of India (DFI) signed a memorandum of understanding with the Army Design Bureau (ADB) to build and design drones for use in India’s defense forces.

Garuda’s Jayaprakash said the company has a sales pipeline of ₹1,000 crore in the next one year. He said that projects like the Ministry of Agriculture’s Agri India Fund (AIF), which on July 30 offered the company a “drone loan” to build affordable ‘Kisan Drones’ — to be used in the agriculture sector — have helped boost the demand.

Both Garuda and IdeaForge are applicants of the drone PLI scheme that was announced on September 15 last year.

On the commercial front, Delhi-based Skye Air Mobility has seen an uptick in orders from enterprises. Ankit Kumar, chief executive of the company, said that between September last year and now, the company has increased its fleet of drones in circulation to 50. This fleet is used to provide drone-based services like deliveries of medicine, restaurant inventory etc. “By March next year, our fleet will increase to 150 drones,” Kumar added.

While Skye Air offers drone services and does not manufacture them for third parties, it does build its own drones — the capacity of which is set to be tripled in the next six months.

A report by consultancy firm EY India and industry body Federation of Indian Chambers of Commerce and Industry (Ficci) published on September 7, said that “focused implementation of drone indigenization projects” in defense, homeland security, counter drones and commercial applications can create an overall market opportunity of ₹1.8 lakh crore by 2030.

However, industry experts warned that this fillip comes with its own set of challenges. The industry must overcome these challenges to realize its full potential in India’s overall push to become a global manufacturing hub.

Akshya Singhal, partner, technology consulting, government and public sector for EY India, said that one key area that needs to be improved is the procurement of locally sourced components for drone manufacturing.

“At present, Indian drone manufacturers source about 25% of its components from the domestic supply chain. The ecosystem should grow as domestic manufacturing steps up, but for now, most components are sourced from abroad,” he said.

Singhal also added that a complex regulatory process for Indian drone makers to sell their fare to international markets is also presently restricting their market opportunity. “There are obvious security concerns, but a more streamlined regulatory process could help Indian drone makers reach out to a far larger user base,” he said.