The Drone Manufacturing Story in India is Finally Taking Off
Kotak Insights | Date 12/10/2024
The whirring of rotors and the buzz of tiny propellers is no longer confined to the realm of science fiction. Once used specifically for classified military operations, these sounds now indicate the rise of the - Drone Revolution.
Unmanned Aerial Vehicles (UAVs), or simply drones, are soaring into mainstream use, transforming industries far beyond the battlefield and becoming ubiquitous in our skies.
Drones have transitioned from just leisure gadgets to key industrial tools driving transformation across multiple sectors.
From the fast-paced world of logistics and delivery to vast agricultural fields and life-saving disaster relief operations, drones are rewriting the playbook on innovation and efficiency.
Civilian Drone Frontiers
In the last decade, falling prices, improved technology, and friendlier regulations have made civilian drone applications accessible to all.
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Delivery Services: Imagine ordering online, and instead of a delivery van, a drone drops the package at your doorstep. Indian startups like Garuda Aerospace are already piloting drone-based delivery services, potentially transforming the e-commerce landscape
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Agriculture: Drones are the new farmer's assistant, monitoring crops, identifying pests, and spraying pesticides precisely.
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Search and Rescue: In emergencies, drones equipped with thermal cameras can locate missing persons faster than human teams in difficult terrain.
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Infrastructure Inspection: Bridges, pipelines, and power lines need regular checks, and drones provide high-definition visuals for identifying issues, reducing risk and saving time.
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Filmmaking and Photography: Drones have made aerial photography accessible, capturing stunning visuals that once required helicopters and large budgets.
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Healthcare: Drones can deliver life-saving supplies to remote areas where traditional transport would take too long.
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Disaster Management: In disaster areas, drones quickly assess damage, allowing rescue teams to plan effectively and save lives.
While drones have already made an impact across civilian sectors, the explosive growth of Indian drone startups that’s taking this technology to new heights.
The Indian Drone Startup Boom: Taking Off in Style
India’s drone industry is taking off. In just three years, drone startups have more than doubled from 157 to 398.
India's drone startup ecosystem is witnessing rapid growth, with new ventures outpacing those of countries like the UK and China.
As of August 2024, China boasted 298 startups, compared with 204 three years ago, whereas the UK’s ecosystem has expanded to 298 startups from 192 in August 2021.
The US leads the league, hosting nearly as many startups as the next six nations combined. From 858 startups in 2021, the number of drone startups in the US has surged 59% over the past three years to 1,366.
However, despite this impressive growth, Indian drone startups still lag behind their global counterparts in terms of funding. The Indian drone startups have attracted US$68 million, while a top drone startup in the US has raked in a staggering US$2.3 bn.
But that’s where the government steps in, with policies designed to accelerate growth and close the gap.
Policy Boosts
India's government is backing its commitment with the Production Linked Incentive (PLI) scheme.
The scheme is a Rs 120 crore boost aimed at incentivising domestic drone manufacturing and cutting back on import reliance. But that’s not all.
The next phase is expected to potentially allocate Rs 3,000 crore to the sector, marking a substantial increase from the previous allocation of Rs 160 crore.
Further, the Drone Shakti scheme is another big initiative that is making waves. The idea is to support startups and leverage drone technology across various sectors like agriculture, healthcare, and logistics. Drone Shakti fosters innovation and entrepreneurship, pushing India to the forefront of global drone advancements.
Major Government Initiatives
One of the significant obstacles to global drone adoption has been regulatory challenges, but Drone Rules 2021 is transforming the landscape for Indian businesses. By simplifying the approval process and cutting down on bureaucratic red tape, these new regulations enable entrepreneurs to launch their drone operations more easily.
A standout feature of these rules is the opening of nearly 90% of Indian airspace, allowing drones to fly up to 400 feet without special permissions. This change not only streamlines operations but also encourages widespread commercial drone usage.
In a decisive move, the Indian government has implemented an import ban on drones for commercial use, except for defence and R&D purposes. The aim is clear: to foster domestic manufacturing and reduce reliance on foreign-made drones.
India's Top Drone Stocks
| Category | Companies |
|---|---|
Public Giants | Hindustan Aeronautics Limited (HAL) |
Private Players | Larsen & Toubro (L&T), Zen Technologies, DCM Shriram |
Commercial Companies | Info Edge, Drone Destination, Droneacharya Aerial, Rattan Enterprises |
Lesser-Known Contributors | Coromandel International, Magellanic Cloud, Solar Industries, Axiscades Technology |
Emerging Startups | Garuda Aerospace, Aerospace360, Edall Systems, Skylark Drones |
As drones become more common in sectors like agriculture and logistics, we’re only beginning to scratch the surface of their potential. The future promises even more ground-breaking applications.
What Next for India’s Drone Revolution?
The drone revolution in India is just getting started, and the possibilities are limitless.
Imagine AI-powered drones autonomously delivering packages, reducing delivery times and costs. Urban Air Vehicles (UAVs) could soon transform city transport, acting as flying taxis in megacities like Mumbai or Delhi. Additionally, drones equipped with advanced sensors could monitor deforestation, pollution, and support wildlife conservation.
Wrapping It Up
As India's drone market soars, it opens up exciting opportunities for innovation, investment, and transforming sectors like agriculture, logistics, and disaster management. By 2024, it is projected to reach US$654 million, with a meteoric rise to USD 1,437 million by 2029—an impressive CAGR of 17%.
Drone units are set to take off too, jumping from 10,803 in 2024 to a jaw-dropping 61,393 by 2029.
And here's the real game-changer: Recent media reports indicate that the government plans to launch a scheme to provide drones to rural women for agricultural use. This initiative aims to empower women in rural areas by enhancing their agricultural practices with advanced technology.
Over the next three years, women's self-help groups (SHGs) will receive 15,000 drones and the necessary training to operate them.
So, as this epic drone revolution takes off, remember to do your homework before investing. Make sure your moves align with your goals and risk vibe.
Happy Learning!
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