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Drone market in India: Taking flight

With this piece, we take a look at the Drone market in India. And no, this isn’t a robot uprising, yet. What we’re going to talk about today is the rise of commercial drone business in India. We take a look at how Drones were invented, the current market overview, the growth drivers, the bummers, business models, use cases, start-ups in the space and finally the future.

Let’s get right in the piece!

If you go back only a few years back, Drones were no more than a toy. One of those fancy helicopters that kids would spend their fathers’ salary on. No joke, Drones are expensive. But surprising enough, this expensive nature of Drones is what led to the commercial nature of the drones. Since most kids can’t afford them, why not sell it to their dads instead?

Anyway, the idea of Drones, to be honest, is nearly 150 years old. They were used in the form of unmanned balloon aircraft used to deliver bombs. However, the invention of first fixed-wing aircraft in 1903 is what probably ignited the invention of Drones till modern-day today.

In 2006, Drones were taken to be serious for commercial purposes and eventually led to a few regulations. They became really serious in 2013 when Amazon announced a plan to develop a drone-based delivery system. Now, this led to a lot of other companies giving drones a shot too and here we are today.

The Drone market in India and the World

In 2018, the Global Commercial Drone market size was valued at USD 5.80bn, with an estimated 274.6 thousand units sold Worldwide. The market was then anticipated to grow at a CAGR of 56.5% and reach USD 129.23 billion during the forecast period of 2019-2025, with filming & Photography being one of the biggest contributors of this growth. Take a look at the image below:

Drone market Global | source: grandviewresearch

Talking specifically about India, the businesses at first were a little sceptical about adopting Drones – however with the onset of the Pandemic and support of the Government, this is changing for good. Per the FCCI and EY reports, the Indian unmanned aerial vehicle (UAV) market is expected to touch $885mn by 2021. While at the same time, the global UAV market size is approaching $21.47bn. The PwC report also states that the Indian UAV market is expected to grow at 18% during 2017-23.

Growth Drivers and bummers

India is slowly becoming a tech-savvy country, with global tech giants like Apple setting up their manufacturing plants in India, adding credibility towards the country’s tech potential. Another reason is the Drones themselves. The use cases (that you will see below) are highly tailored per the industry requirement, offer higher flexibility to small and large businesses. Small businesses like start-ups are becoming the enablers – credits to the rising start-up culture in India. Also, the onset of Pandemic and social distancing has given a much-needed push to this industry.

Another big reason for the positive outlook of this industry appears to be the Government. Earlier, in 2014 the Government banned the use of “civil” Drones in India after a local Pizzeria in Mumbai used it for delivering Pizza. This caused a lot of confusion if Drones were allowed to be used, one of the reasons why there was lesser funding in the industry a few years back.

However, the recent Government policy (in Dec’19) laid down the guidelines for commercial usage of Drones with clear defined guidelines, you can check here. In any case, it is not far from the truth that the rules aren’t perfect, but we can’t blame the government, the regulator is struggling too – it’s a new industry altogether after all.

Some of the challenges this industry is facing stem from the “newness” of this industry: It is apparent that the use cases of Drones haven’t gathered the deserved attention. The major issue is that of privacy and so the awareness of this industry has itself taken a hit. Further, the expensive nature of these Drones is what keeping the adaptation at bay. It is said that the average price of a Drone is $280 – accounting to around 20k in INR. This drone may not even offer commercial uses.

Investments in the space

As we mentioned earlier, after the ban in 2014, there was a lot of ambiguity about the usage of Drones and naturally, the funding was less. Per Inc42 2019 Drone report, the total funding raised by Drone start-ups in India between 2014-2018 was just $16.56mn which accounted for 2.26% of deep tech funding in the same year. Meanwhile, China had 14x the investment in the space. In fact, India relied on China to import Drones and this is what led to the formation of regulations to be self-reliant.

Related: Take a look at the influence of Chinese Investments in India

Currently, there are 50+ Drone startups in India, which means, it still appears to be a blue ocean at the moment. Broadly there are 3 commercial Business models these startups are looking at.

  1. Service Subscription model: Here, there are a pre-defined set of activities that these startups offer as a service. Example of this could be, say, field scanning OR terrain capability. This model also involves an expert taking care of the client requirements – the client need not worry about the tech-awareness part.
  2. Rent-A-Drone model: Here, usually, a company employee knows how to operate a Drone in which case they rent a drone for a temporary purpose and return it back as the need is fulfilled. Say you want to examine an area of land that you want to purchase for your future industry. Using Drones, you can examine not only the geographic features but also understand various pointers like soil fertility, water levels, etc. Drones can also be used in festive places to prevent emergencies. Say you’re in Kumbh Mela and you’re lost, a flying Drone using advanced AI can spot your face and return you to your mother. Interesting?
  3. Sale of Drones: These are for the projects that may require the use of Drones more frequently. Farming and hyperlocal deliveries are popular examples of this service
Related: Take a look at the AI Industry in India and the World

Now there are also value-added services like repair, installation, maintenance of software and hardware which may spin-off as another Business model as the industry picks up in the future.

Finally, talking about the use cases. As you may have already understood by what you read above. Drones will popularly be used in Farming, hyperlocal and E-commerce deliveries, Geographic scanning and surveillance.

Perhaps the most useful feature of Drones appears to be automatic farming. You don’t have to use the traditional ways to water your plants, Drones can water the plants for you and they can do so more efficiently. More than 40% of India’s population is employed in farming and unfortunately, as we become more urban, the number falls by the day. It is no surprise then that the Government is looking at regulations of using Drones for farming. The Inc42 report we talked about earlier pointed out a $250mn market opportunity in Agriculture and a $161mn market opportunity in Ecommerce and Hyperlocal delivery space.

Perhaps the day when you actually get your Pizza through your window isn’t so far. However, it is precisely why it was banned in the first place, the privacy is a question mark with Drones. But we’re sure our smart techies will probably figure something out.


The Author of this piece is Yash Thakker. If you liked the piece, go ahead and share it on WhatsApp.

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