In today's Finshots we see why India's drone ban may do more harm than good.
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The Story
This year’s republic day celebrations had a bit of everything. But more importantly, it had drones. As many as 1,000 drones took to the air and lit up the evening sky with a spectacular 10-minute long display of synchronised flying. It was a sight to behold. They flew, they hovered, and they took shapes of objects and patterns mid-air, creating complex formations in the likeness of the Indian map and Mahatma Gandhi.
The mesmerizing show was put together by the government to commemorate the 75th year of Independence and to showcase India’s capability as a rising drone power. And staying true to this spirit, you could see that all the participating drones and their on-ground controllers were ‘Made in India’ — courtesy of Botlab Dynamics — a homegrown start-up incubated at IIT Delhi.
Here — You can even watch the show yourself.
And needless to say, this was an extremely proud moment for the Government of India. Which is perhaps why the establishment decided to put a blanket ban on the import of foreign-made drones, just 11 days after the show.
Yeah, this story took a drastic turn, didn’t it?
The government’s rationale here is simple. If the domestic drone industry is protected from commercial foreign imports, it will go a long way in offering us the capacity to build and scale. And outside of cultivating the domestic industry the ban also keeps Chinese drones out of Indian airspace. Chinese drones have long been suspected to be tools deployed by Chinese intelligence agencies. No one can say for certain if there’s any real truth here, but the government doesn’t want to risk having spycraft devices floating around, especially considering most of our drone-related imports come from our notorious neighbour to the east.
Also, some estimates have pegged that the domestic drone market could be worth as much as $1.81 billion by 2026. So, you can see why the government would want to ban foreign imports.
Except, a blanket ban on the import of drones probably stands to damage the domestic industry more than it helps, at least in the short term. First, the decision temporarily derails any plans people may harbour of making a living importing and operating foreign-made drones in India. If you were on the lookout for a drone and you were seeking an Indian alternative, chances are you won’t find a product that’s fully fleshed out, at least not to your desired specifications. Also, one cannot expect Indian manufacturers to develop and scale at such short notice — no matter how pumped they are.
Now the government will argue that there won’t exactly be a vacuum here the way we anticipate. They put together an elaborate Production Linked Incentive (PLI) scheme worth ₹120 crore, to promote domestic drone manufacturing only recently. And the incentives alone add up to more than double the combined turnover of domestic drone manufacturers. Surely, the PLI should help no?
Maybe.
But production linked incentives work best when you have the means to produce. They work well when the foundation is robust. However, we still do not have an ecosystem where we can churn out locally made batteries or motors, or even the competence needed to produce relevant electronics at scale. And this lack of scale will often translate to a higher cost to consumers — who will probably have to pay a premium now to own a decently operational drone.
Remember, India’s drone ambitions have been a work in progress. It’s been almost a year since India’s drone rules were first made public. At the time most drone enthusiasts felt the rules missed their mark. They required you to fill out copious amounts of paperwork, get licences, pay sizeable fees before you could own and fly drones.
The industry lobbied hard and convinced the government to take another look and we got better, much simpler rules. Maybe, this ban will also see a similar reaction and perhaps the government will find better ways of boosting domestic production while also facilitating foreign imports.
Until then…
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