GS Paper - 3 (Economy)

The government on 15 September 2021 approved a production-linked incentive (PLI) scheme for drones and drone components. Together with the liberalised drone rule enacted last month, the aviation ministry expects drone manufacturing to attract investment in the next three years, generating direct jobs over the next three years.

What

  1. The PLI rate at a constant 20% for all three years is an exceptional treatment given only to the drone industry. In PLI schemes for other sectors, the PLI rate reduces every year.
  2. The government has kept the eligibility norm for MSME and startups in terms of annual sales turnover at Rs 2 crore (for drones) and Rs 50 lakhs (for drone components).
  3. The eligibility norm for non-MSME companies in terms of annual sales turnover has been kept at Rs 4 crore (for drones) and Rs 1 crore (for drone components).
  4. The proposed tenure of the PLI scheme is three years starting in FY 2021-22. The PLI scheme will be extended or redrafted after studying its impact in consultation with the industry.
  5. The Government has agreed to fix the minimum value addition norm at 40% of net sales for drones and drone components instead of 50%, another exceptional treatment given to the drone industry.