Yesterday, I was watching one of my all-time favorite movies – 3-Idiots. Not only mine but this film holds a special place in the hearts of many people.
Film has always inspired and inspired me to chase excellence and not success. However, I will move on to the part where Joey Lobo kills himself because he couldn’t complete the project on the drone.
I loved his character and his innovative mind. He was building a plane that flew high and had cameras on it, that is, a drone!
Back in 2009, when the movie was released, drones were like a magic wand for us. We were all surprised by the idea shown in the film.
But nowadays drone viewing (for multi-use purposes) has become very common.
We’ve gone from watching drones in film to watching drones in real life, This got me thinking about how the drone industry has developed in India.
As it turns out, the government has paid special attention to Drone Sector, In August 2021, the government laid out big plans for the drone industry in its Product Linked Incentive (PLI) scheme.
As things stand, the government is again planning to provide a bazooka to the drone sector by increasing the PLI allocation.
PLI Scheme for Drones
In September last year, the government first introduced the PLI scheme for drones. The PLI scheme has earmarked an outlay of Rs 1.2 billion over three years for drone manufacturers. The plan was capped at 25% of the total annual outlay for the individual drone manufacturer.
The plan was expected to double the combined sales turnover of companies in the drone market in the financial year 2021-22. The Ministry of Civil Aviation had estimated that India’s drone sector would achieve a total turnover of Rs 120-150 billion by 2026.
In addition, the government had planned to attract an investment of Rs 50 billion and create more than 10,000 jobs over the next three years in the drone manufacturing industry.
The scheme mandates 40% of the value addition to the total GST billed products of the industry.
When the scheme was launched, 23 beneficiaries were selected.
One year has already passed from the plan of the plan for three years. Did the Drone Industry Achieve the Goal in This One Year?
let’s find out…
Did the Drone Industry Achieve Its Goals?
Imagine that a mother worked very hard with her child during one academic year. Both of them worked hard to ensure that they get the first rank in the class.
When the results came out, the mother learned that her child was not only the first in her class, but also the ranker of the entire school.
Imagine how proud and happy the mother of the child must have felt.
At the end of the financial year 2021-22, the government must have felt the same pride as the drone industry not only lived up to its expectations, but also exceeded the expectations of the government with big projections.
According to reports from the Ministry of Civil Aviation, the turnover of the drone industry has more than tripled to Rs 3.2 billion in FY 2021-22, which is significantly higher than the plan’s target of Rs 2 billion.
For the fiscal year 2022-23, the government has set a target of Rs 4 billion in turnover, but considering the growth trajectory, it is now projected to reach Rs 7 billion. In fact, even the outlay of funds is expected to increase from Rs 1.2 billion to Rs 5 billion.
This is a huge positive for the entire industry as the allocation being planned is almost four times more than what was earlier planned.
The industry has achieved 66% of the value addition in its GST billed products.
So the drone industry has not only achieved the goals, but has really achieved the goals. Government scheme achieving more than the target! Now, this is a rare occurrence.
Before you think about why we are going completely on drones and why drones are progressing at an unrealistic pace, let us remind you that drones have multi-purposes.
Some are saying that drones are the future of defence, while they are also making a mark for non-defense purposes.
What is so special about drones?
After watching the movie URI, Indians are very clear about how drones can be used in the defense sector. Drones can carry night vision cameras and they can be hidden. Therefore, drones can be used as an effective spy without endangering human life.
However, this is not the only use of drones. Drones can be used for many purposes. For example, ICMR’s initiative to use drones to deliver vaccines to remote areas of eastern India became very popular.
During the COVID-19 period, drones were used for many things like making e-commerce deliveries.
Food delivery platforms Zomato and Swiggy are already planning to arm themselves to deliver food with the help of drones. The plans were put on the back foot due to regulatory concerns, which may soon change.
Drones will prove to be a game changer for the agriculture sector. Drones can be used for irrigation, which is a boon for a country dependent on agriculture like India.
A simple spray of a pesticide can solve many problems like labor shortage, water consumption and crop damage. With the use of drones, farmers can increase their production by 10% to 15%.
Drones are also used for mapping. The government is already leveraging the power of drone technology.
Then there is monitoring. Tasks that used to take several weeks are now done with data more accurately in just a few days, which allows different companies to forecast and plan more accurately.
The above list is not all-inclusive; It could be of more use. No wonder the government is taking several initiatives to boost the drone industry.
We talked about the PLI scheme, but many other government schemes revolve around drones.
Various Government Initiatives Around Drones
The government is emphasizing on the use of drones in various afforestation and agriculture projects. The Center has announced funding of up to Rs 6,000 per hectare to promote the use of drones in agriculture.
It has already undertaken various afforestation and irrigation projects. For example, it launched a green project to plant 1 billion trees in Telangana by 2030 – in partnership with a drone start-up called ‘Marut Drones’.
‘Marut Drones’ will use its ‘Seedcopter’ drone for seeding in the planned areas. For a similar project, drones were deployed by the Indian Forest Department in 2018 to monitor plantations in Nagpur.
For example, the SVAMITVA scheme (Survey of Villages and Mapping with Improved Technology in Rural Areas) was launched in April 2020 to help Indian rural residents establish clear ownership of their properties by mapping land parcels via drones. So to receive. More than 662 lakh villages have benefited from this scheme.
Undoubtedly, the drone industry is booming. So it begs the question of how businesses are taking advantage of the opportunity presented by the drone industry.
Business houses seize the opportunity of drones
After the dominance of the military segment, commercial operators are slowly entering the drone industry. Presently, there are more than 120 companies engaged in manufacturing of drones and drone components in India.
Even big business houses are entering the drone industry.
As always, Ambani was the first to invest in the growing drone sector. In 2019, Reliance Industries acquired a 51% stake in Bengaluru-based Asteria Aerospace for just 230m.
The move is expected to do well for Reliance’s oil and gas pipelines where drones are increasingly replacing helicopters and human security for surveillance and security. In telecommunications, Reliance Jio maintains and surveys potential locations for towers.
Gautam Adani is not behind even Mukesh Ambani. Adani Group is known to spread its wings in different regions And the drone industry was no exception.
Adani Group acquired Bengaluru-based drone start-up General Aeronautics in a cash deal. Less than 500m was rumored to be involved in the deal. The Adani Group’s primary focus will be on agriculture, although the group sees several areas of opportunities for commercial use of drones.
DCM Shriram Industries acquired 30% stake in Turkish drone company Zyrone Dynamics through an investment of US$1m. The group has forayed into defense manufacturing and the acquisition will produce drones for India and the global market.
In May 2022, RatanIndia Enterprises acquired a 60% stake in Bengaluru-based Throttle Aerospace Systems for an undisclosed amount. The investment was made through NeoSky India Limited (NeoSky), a wholly owned subsidiary of RatanIndia Enterprises.
With this acquisition, NeoSky will provide NeoSky customers a wide range of customers covering categories such as Drone as a Product (DAAP – Drone Hardware), Drone as a Service (DAAS – Drone Service Solution) and Software as a Service (SAAS – Drone Software). The full 360-degree drone will allow the solution to be provided. ,
Infosys holds stake in drone startup IdeaForge.
So as you can see, listed Indian drone companies are already making good progress in terms of drones.
Indian drone start-ups are also growing at a good pace in the unlisted sector. Let us compare how Indian start-ups have developed in comparison to other countries.
Who has his best foot?
In the last 8 months, the number of drone start-ups in India has increased by 34%. This is the highest among other comparable economies. According to global start-up data platform TraxN, the number of drone start-ups in the country increased from 157 in August 2021 to 211 in March 2022.
In terms of absolute numbers, India grew by 54 star-ups. The US was the only country to overtake India in terms of absolute numbers. Take a look at the chart below:
Number of Indian start-ups in different countries
The number of start-ups has grown at a good pace but the funding for start-ups has not been very good.
Funding for the top 10 start-ups only increased by 10%. Average funding increased from US$5.1m per start-up to US$5.6m.
While the number of drone start-ups in the US increased by 13.1%, funding for the top 10 start-ups increased by 32.7%. In Australia, despite a 13.6% increase in the number of start-ups in Australia, funding increased by 57.6%.
Israel was the only country with a 1.5% increase in funding between August 2021 and March 2022.
Take a look at the chart below:
Average funding of top 10 start-ups in different countries
it seems like Eagle The one used in URI will soon be not only a filmmaker’s vision but India’s reality as the Indian drone industry continues to soar.
It has achieved great heights, but there is a lot of scope for growth in the drone industry.
The huge growth opportunity in this sector signifies huge investment opportunities for retail investors as well.
But one should tread carefully as huge growth also means big risk. Currently the growth is attractive but what if the growth does not turn into profits?
India is looking forward to export drones but what if some other countries overtake India?
Thus an investor should first do their risk-reward analysis carefully. investing in drone stocks,
Disclaimer: This article is for informational purposes only. This is not a stock recommendation and should not be treated as such.
This article is syndicated from equitymaster.com,
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)