Import Ban on Foreign Drones

Context:

Recently, the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry has banned the import of foreign drones.

Why has the Government decided to ban imports of drones?

Growth of drone manufacturing in India: The Government estimates that the drones and drone components manufacturing industry will attract investments of over Rs 50 billion over the next three years. The annual sales turnover of the drone manufacturing industry is expected to grow multifold from Rs 600 million in 2020-21 to over Rs 9 billion in FY 2023-24. During this period, the drone manufacturing industry is expected to generate over 10,000 direct jobs.

Cumulatively, the drone services industry is expected to grow to over Rs 300 billion in the next three years and generate over 500,000 jobs

Status of drone imports: At present, India imports drones from various countries e.g., (a) For defence needs, India imports drones from Israel and the U.S., (b) Consumer drones such as those used in wedding photography come from China; (c) Drones for light shows are imported from China as well as Russia.

At present, more than 90% of the Indian drone market is flooded by imported drones, the vast majority of them are Chinese which is a cause of concern for the Government.

What does the order say?

• The Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry issued an order on February 2022 prohibiting with immediate effect the import of drones. 
• Import of drones by government entities, educational institutions, government recognised R&D entities and drone manufacturers for R&D purpose as well as for defence and security purposes will be allowed provided upon approval from DGFT. 
• The order also says that import of drone components is “free”, implying that no permission is needed from the DGFT allowing local manufacturers to import parts likes diodes, chips, motors, lithium ion batteries etc. 
• Before this order, import of drones was “restricted” and needed prior clearance of the Directorate General of Civil Aviation (DGCA) and an import license from DGFT. 
• However, smaller drones known as nano category drones that weighed less than 250 grams and flew below 50 feet or 15 meters needed an equipment type approval from the Department of Telecommunications for operating in de-licensed frequency band(s) and did not require an import clearance of the DGCA or an import license from the DGFT.

Exception

The importance of drones by government entities and educational institutions recognised by central or state government, the government recognised research entities and drone manufacturers will be allowed in CBU, SKD or CKD form. It will though be subject to import authorisation issued by DGFT.

The import of drones for defence and security purposes will also be allowed subject to approval from the DGFT. 

What is likely to be the immediate impact of the announcement? 

• What the import ban will do is that it will ensure that an Indian manufacturer has the control of the IP, design and software which gives him or her a total understanding and control of the product. Over a period of time this can enable further indigenisation.
• Domestic industry has considered it as very good move by the Government to nurture and protect the industry.
• But how well the ban is implemented remains to be seen. 
• There are questions raised on the difference which the import ban will make especially when local manufacturers rely heavily on foreign-made components. 
• Most drone manufacturers in India assemble imported components in India, and there is less of manufacturing.
• For its defence needs, India imports from Israel and the U.S.. Consumer drones such as those used for wedding photography come from China and drones for light shows also come from China apart from Russia. 
• Indian drone manufacturers and service providers arrange drones for a variety of use cases such as survey and mapping, security and surveillance, inspection, construction progress monitoring and drone delivery.
• The ban is likely to hurt those who use drones for photography and videography for weddings and events as these primarily come from China because they are cheaper and easy-to-use and India still has a lot of catching up to do in manufacturing them. 

What are the challenges associated with banning drone imports?

• India does not have the manufacturing capacity to cut dependence on imports. So, banning drone imports will lead to a lot of disruption in terms of business and derail a lot of well-laid plans as 90% of the service providers in India are using imported drones.
• Many foreign brands specially make drones for agricultural use. This would have helped with the Government’s Kisan drone initiatives. These too will now be restricted.
• India does not have a supply chain for the local manufacturing of drones. Hence, schemes like PLI Scheme for drones and drone components to encourage local manufacturing will not have much impact.
• It will increase the cost burden on companies, as imported drones are cheaper than locally assembled ones.
• Banning drone imports would be bad news for drone enthusiasts, who import them for photography, video and other leisurely activities.

What are the measures taken to promote indigenous drone manufacturing?

Liberalised Drone Rules, 2021: The Government brought out liberalised Drone Rules in 2021. This reduced the number of forms to be filled to seek authorisation from 25 to 5. Apart from that, the rules; (a) Dispensed with the need for security clearance before any registration or issuance of the licence, (b) R&D entities have been provided blanket exemption from all kinds of permissions; (c) Removed the restrictions on foreign-owned companies registered in India.

Drone Certification Scheme: The scheme was notified under Rule 7 of the liberalised Drone Rules, 2021. The scheme will help in simpler, faster and transparent type-certification of drones.

Single window Digital Sky Platform: It is the first-of-its-kind national unmanned traffic management (UTM) platform that implements “No Permission, No Takeoff” (NPNT). Users will be required to do a one-time registration of their drones, pilots and owners.

Production-linked incentive scheme for drones and drone components: The scheme aims to make India a “global drone hub by 2030”. It has allocated ₹120 crores for a period of three years, under which it will offer an incentive of 20% of the value addition made by a manufacturer of drones or drone components or drone-related IT products.

Apart from giving a boost to local manufacturers, the scheme will also encourage foreign manufacturers to set up assembly lines in India.

Promote drone use in agriculture: The guidelines of Sub-Mission on Agricultural Mechanization (SMAM) have been amended: (a) To provide a grant up to 100% of the cost of agriculture drone or Rs.10 lakhs, whichever is less; (b) Graduates establishing Custom Hiring Centre (CHC) will be eligible for subsidy up to 50% of the cost of the drone and associated equipment up to Rs 5 lakhs, etc.

What are the various Applications of Drones?

What is the Drone Shakti Scheme?

• The Union Budget pushed for promotion of drones through startups and skilling at Industrial Training Institutes (ITIs).
• Startups will be promoted to facilitate ‘Drone Shakti’ through varied applications and for Drone-As-A-Service (DrAAS). Courses for skilling will also be started in selected ITIs across all States.
  • DrAAS allows enterprises to avail various services from drone companies, removing the need for them to invest in drone hardware or software, pilots, and training programmes.
  • Sectors where drones can be employed are endless. These include photography, agriculture, mining, telecom, insurance, telecom, oil & gas, construction, transport, disaster management, geo-spatial mapping, forest and wildlife, defence and law enforcement to name a few.
• Drones will also be promoted for crop assessment, digitisation of land records, spraying of insecticides and nutrients (Kisan Drones).
• The drone services industry is expected to grow to over Rs 30,000 crore in next three years and generate over five lakh jobs.

Source: The Hindu

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