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Drone Laws in India: Incentivize Business, Manufacturing & Foreign Investment

The drone industry in India is valued at $880 million and has immense potential for revolutionizing the way commerce works. Here are the key takeaways of the new Drone Rules of 2021.

The Government recently introduced the ‘Drone Rules 2021’ that aims at making the drone market cheaper and more accessible in India, including attracting foreign investment. The new rules hope to bring with them new opportunities for the sector. After the onset of the Pandemic, many industries suffered adversely, except the pharmaceutical industry. It saw a massive boom due to the need for vaccines and medicines, in general. Since the rural population is still devoid of basic healthcare in India, with the current technological boom worldwide, there is an opportunity in the Indian healthcare sector to innovate the concept of an on-demand drone delivery system that could revolutionize healthcare accessibility in India.

Liberalization of Drone Laws/Rules in India

A ‘Drone’ under the rules has been defined as an ‘unmanned aircraft system’ (UAS). A UAS is, ‘an aircraft that can operate autonomously or can be operated remotely without a pilot on board.’ The rules apply to all persons who own, possess or are engaged in the business of leasing, operating, maintaining or transferring a UAS in India, or registered in India. The following are the key takeaways from the new rules:

Digital Sky Platform and UTM

A Digital Sky Platform has been established as a singular platform for all UAS-related matters, including registration, deregistration, transfer, and overall management. The platform will be hosted by the Directorate General of Civil Aviation or DGCA. To develop a safety framework is critical and in lieu of this, the Government published the ‘National Unmanned Aircraft System Traffic Management (UTM) Policy Framework’ (UTM Policy Framework). This is essential to create a combination of standards, procedures, and real-time data exchange to manage traffic. The current framework is not equipped to handle UAS traffic. The UTM policy also lays down roles and responsibilities of the Central Government, DGCA, Air Traffic Control, Airspace Management Agencies, etc.

Regime to Attract Investors

To make the market more conducive for drone start-ups and foreign investors, the Government has sought to ease manufacturing and operating of drones under the new rules. There are no restrictions on foreign-owned/controlled Indian companies operating drones in India. Thus, the new rules aim at foreign investment in the sector.

Ease in R&D

The new rules have significantly reduced complications in conducting research and development (R&D) for UAS. A manufacturer can conduct R&D with only a Goods & Services Tax (GST) identification number; they need not acquire a separate certificate/clearance.

Product Linked Incentive (PLI) Schemes

In September 2021, the Government approved a PLI scheme for drone and drone components. This included an investment of over INR 1 billion for drones and related components over the next three financial years.
  • Per manufacturer, the PLI has a ceiling of INR 300 million or 20% of the value addition of the concerned manufacturer.
  • Drone start-ups and Micro, Small & Medium Enterprises (MSMEs) with sales turnover above INR 20 million (for drones) and INR 5 million (for components), respectively, would also be eligible for the benefits of the PLI scheme.
  • The scheme further covers those creating drone related IT materials and aims at scaling-up domestic manufacturing.

Other Key Takeaways

  • Coverage of drones increased from 300 kgs to 500 kgs to include heavy payload-carrying drones and drone taxis.
  • Reduction in number of forms/permissions sought from 25 to just 5.
  • No requirement of security clearance before any registration or license issuance.
  • Permission fees reduced to nominal levels.
  • Under Drone Rules 2021, maximum penalty reduced to INR 1 lakh. This is, however, not applicable to other laws and their violations thereof.
  • An airspace map with green, yellow and red zones will be displayed on the Digital Sky Platform.
  • Online registration of all drones shall be done through the Digital Sky Platform.
  • No pilot license required for operating nano drones and micro drones for non-commercial use.
  • Training and examination for drones to be conducted by an authorized drone school, with training requirements prescribed by the DGCA, which will also act as a watchdog over drone schools.

Impact of Drones on the Pharmaceutical Industry

It is known that using drones will make delivery of critical medicine and healthcare faster and more accessible. It will also facilitate in resource and supply chain management, while ensuring on-time delivery of medicines. Like railways changed how goods were supplied, drones could revolutionalize the healthcare-delivery system in India, where, even today, 67% of the population resides in rural areas. Below are some of the benefits of using drones in the healthcare/pharma sector:

Transportation of Hazardous Material

Certain hazardous medical materials have to be delivered intact and in a timely manner. Such materials are often transferred by road, leaving them exposed and subject to contamination, while they might also endanger the environment if they escape. Blood, for example, is one such material. It is temperature sensitive, prone to contamination and can infect others if exposed. Congestion in cities can cause unwanted delays leading to disruptions. Drones can easily solve this by transporting such material quickly and efficiently, without causing disruptions to the material and exposing it to the environment.

Essential Vaccine Delivery

The onset of the pandemic has made accessibility to vaccines crucial. However, not everyone around the world has been lucky. Wingcopter, a German drone company, managed to deliver certain vaccines for children in the Pacific island-nation of Vanuatu, which is largely inaccessible otherwise. They also managed to deliver Covid vaccines to the coastal areas of Ireland, Africa and parts of Southeast Asia. This is not easy. Hence, if drones are the future, a consolidated effort must be made now to deliver such products by drones so that the art can be mastered and hurdles are identified and overcome. Each healthcare event is an opportunity for the drone-delivery system.

Diagnostic in Healthcare

Diagnosis of an illness is essential for saving lives. Therefore, timely diagnosis of samples is the bedrock of a good healthcare system. This could be one of the most profitable avenues for drones in the near future. Some diagnostic tests are extremely vulnerable to time and temperature. After a sample is collected, it must be sent to a lab for tests within a short duration, sometimes as short as just two hours or less. Drones can ensure that no delay is caused and that the sample reaches the lab in prime condition for tests/diagnosis. Not all hospitals, clinics and health centers have a readily available diagnostic lab, and therefore, movement of samples is extremely common in the industry. A drone can ease this by carrying vast samples in significantly reduced time to ensure that the diagnosis is as accurate as possible. 

Emergency Response

Drones can be extremely useful and handy as quick emergency response mechanisms. They have the ability to deliver medical equipment required at an accident or disaster sights as first aid. For example, defibrillators for the heart or other small medicines that may be crucial in the initial minutes after an accident to save a life. Currently, our response systems include ambulances, which may be delayed due to traffic or other hurdles and are especially not efficient in responding in certain parts of the world, including India. A discussion on this must begin soon has it has not been raised yet.

Organ Transport

We often hear heroic tales of traffic policemen managing the roads in a manner that ensures that an ambulance or an organ delivery reaches the person in need in time. While such stories are heroic, they point to the inefficiency in our system and showcase how delays can cost lives; not everybody is lucky. Organ delivery/donation has taken up a huge importance nowadays. The younger population is willing to donate their own organs or the organs of their loved ones upon death to those in need. Thus, drones here can be extremely feasible for delivering timely donation of organs. A drone is fast enough to cut across cities in minutes, big enough to store organs for delivery with the requisite temperature and hygiene, and small enough to navigate through a tightly-walled and congested city/area. This could be a positive avenue for drones.

Prospective Research to Make Use of Drones in Healthcare Better

While all the aforementioned uses of drones are yet to be fully explored and utilized, research must continue on how to make drone-service better. Below are some suggestions for more examination of drone-services in healthcare:
  • Studying the gross weight of medicines that can be carried safely and in time. This must be done while keeping changeable environment conditions in mind and understanding the extreme limits to which the drone can be pushed without altering the condition/efficacy of the medical supply.
  • Carrying out a study or survey of the medical supply post-delivery to examine whether any changes in nature of the medicines has occurred. A check or monitoring of efficacy must also be made.
  • An in-flight system must be made to monitor the condition of supplies while in transit to ensure that they do not fall below the prescribed manufacturer conditions/recommendations. Factors such as gravitational forces, pressure, temperature, vibrations, etc. must be monitored.
  • Security and authentication mechanisms must be in place to ensure that the supply reaches the desired recipient and that no tampering occurs in transit.
  • A thorough understanding and contingency for drone failure/crash in transit. A study on the impact it may cause to the medicine supply and the environment, including possible human injury and property damage. Liabilities in case of such an event must be clearly defined.

‘Medicines from Sky’ project: Telangana

With its new policies and incentive schemes, India is surely looking to uncover its UAS potential and become a large part of the global drone industry, which is expected to top $24 billion by 2022. The new regime ensures reduction in ‘red tape’ enhancing ease of doing business and easy compliance. Telangana’s ‘Medicines from Sky’ project shows the drive in India to make the drone industry successful.
Under this project:
  • Telangana aims to provide medicines, vaccinations and blood to remote and needy areas of the state by drones.
  • This project is a collaboration between private entities, the State Government, the World Economic Forum, HealthNet Global and NITI Aayog.


A report published jointly by Ernst & Young (EY) and the Federation of Indian Chambers of Commerce & Industry (FICCI) evaluated India’s unmanned aerial vehicle industry to be over $880 million by the end of 2021. With the right policies and incentives, the future of drones in India looks promising and is ready to blossom.

Although there is still a long way to go to make the system full proof and safe for delivery of essentials. However, the new rules and initiative with projects such as ‘Medicines from Sky’ will incentivize those in the industry to transform the logistics of the healthcare system in India. 


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