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India Is Positioned To Becoming The Next Global Drone Hub – Aviation


Since 2021, the Indian government has accelerated its efforts to
create a strong Unmanned Aircraft Systems (UAS) or
drones manufacturing ecosystem in India. Towards this end, we
witnessed the liberalization of the regulatory regime concerning
drones; Product Linked Incentive Scheme for drones and drone
components and announcement of the Drone Shakti (Drone Power)
scheme in Budget 2022.

Government’s focus is to make India a global hub for
research and development, testing, manufacturing, operation and
export of drones. Drones are becoming increasingly relevant in
almost all sectors such as agriculture, national defence, law
enforcement, surveillance, geospatial mapping, and emergency
response to name a few. Given India’s size, drone technology is
a definite boon, particularly in areas of agriculture, healthcare
and emergency response.

Juxtaposed to this buzz is the ongoing dialogue on the need to
establish a specific multilateral process, ‘Drone
Technology Control Regime
‘, to develop standards for the
design, use and export of drones since the existing multilateral
regime, Missile Technology Control Regime (MTCR),
which currently covers UAS, is being found wanting in its extant
procedures.

Inarguably, UAS regulatory regime must be effective due to its
potential for use in military and insurgent warfare. There are
increasing instances across the world where drones are being
(mis)used by non-State actors to inflict large scale damage to
civilian lives and property. India is also no stranger to such
misuse having been a victim of drone terrorism from its neighboring
countries and has in place detailed SOP for the armed forces to
counter drone terrorism.

As the use of civilian, commercial, and military drones expand,
we examine the regulatory regime existing in India governing the
manufacture, use, export and import of drones.

The Drone Rules, 2021

In March 2021, Government notified the Unmanned Aircraft System
Rules (UAS Rules), which were regulatory and
compliance intensive with numerous approvals, including unique
authorization number, unique prototype identification number,
certificate of manufacturing and airworthiness, certificate of
conformance, certificate of maintenance, import clearance,
acceptance of existing drones, operator permit, authorization of
R&D organization, remote pilot instructor authorization, drone
port authorization, and so on. The UAS Rules were superseded by the
extant “liberal” Drone Rules, 2021
(Rules).1

It is noteworthy that the Government has chosen to regulate UAS
as opposed to simply the Unmanned Aerial Vehicles
(UAV), thereby covering the entire system required
for advanced drone operations including the aircraft, ground
control station, and communications system.

These Rules have been formulated under the Aircraft Act, 1934
(Act) and are regulated by the Director General
Civil Aviation (DGCA) under the Ministry of Civil
Aviation and provide for a licensing regime to regulate the owning,
possessing, leasing, operating, transferring or maintaining an UAS
in India. The Rules apply to UAS registered in, operated in or over
India, with an all-up-weight of not more than 500 kilograms. UAS
belonging to, or used by, the naval, military or air forces of
India are excluded from the ambit of the Rules. These Rules also do
not regulate the import or export of UAS, which are regulated by
another Ministry, as discussed later.

UAS exceeding 500 kilograms will be subject to the provisions of
the Aircraft Rules, 1937 also formulated under the Act, which
regulate the flight, safety conditions, registration,
airworthiness, apparatus used, logs maintained, communication,
navigation and surveillance equipment etc. of all aircraft.

The Rules categorize UAS into aeroplane; rotorcraft; and hybrid
unmanned aircraft system, which are further sub-categorized into
remotely piloted aircraft system; model remotely piloted aircraft
system; and autonomous unmanned aircraft system. These categories
of UAS are classified, for purposes of certification, on the basis
of maximum all-up weight, including payload, into:

  1. Nano UAS: weighing less than or equal to 250 grams;

  2. Micro UAS: weighing more than 250 grams, but less than or equal
    to 2 kilograms;

  3. Small UAS: weighing more than 2 kilograms, but less than or
    equal to 25 kilograms;

  4. Medium UAS: weighing more than 25 kilograms, but less than or
    equal to 150 kilograms; and

  5. Large UAS: weighing more than 150 kilograms, upto 500
    kilograms.

Certification/Registration

Under the Rules, all UAS are required to obtain a Type
Certificate from the DGCA, or any other entity authorized by the
DGCA, certifying that a UAS of a specific type meets with the
requirements under the Rules to be classified as that type. The
certifying authority may choose to accept approvals given by
specific foreign regulators. No Type Certificate is, however,
required for the manufacture or import of Nano UAS and model
remotely piloted aircraft system.

A person is allowed to operate an UAS in India only pursuant to
its registration on the digital sky platform and obtaining a unique
identification number. A remote pilot, or an individual charged by
the operator with duties essential to the operation of an unmanned
aircraft and who manipulates the flight controls during flight
time, must also obtain a Remote Pilot Certificate from an
authorized remote pilot training organization.

Transfer by way of by way of sale, lease, gift, or any other
mode, is only permitted upon furnishing of details of the
transferor, transferee and unique identification number.

Exemptions

The exempted categories for purposes of licenses under the Rules
are:

  1. Nano UAS: Exempted from procuring a type license and remote
    pilot license

  2. Micro UAS: Exempted from procuring a remote pilot license

  3. Model remotely piloted aircraft system: Exempted from procuring
    a type license

Additionally, no certificate, license, permission is required
for operating UAS for persons engaged in the following research,
development and testing activities, provided these activities take
place in the green zone and within the premises of the person where
such research, development and testing activities are carried
out:

  1. R&D entity under the administrative control or, or
    recognized by, the government.

  2. Educational institution under the administrative control or, or
    recognized by, the government.

  3. Startup recognized by the Department for Promotion of Industry
    and Internal Trade.

  4. Authorized testing entity; and

  5. UAS manufacturer having a Good and Service Tax Identification
    Number.

Operation of UAS

For operation of a UAS, the Central Government has published an
interactive airspace map, segregating the entire airspace of India
into red zone, yellow zone and green zone, with a horizontal
resolution equal or finer than 10 meters. Prior permission is
required for operating UAS in red and yellow zones.

The Rules expressly prohibit a person from carrying or cause or
permitting to carry in any unmanned aircraft to, from, within or
over India, any arms, ammunitions, munitions of war, implements of
war, explosives and military stores, unless permitted.

Additionally, there is a specific requirement of not operating
the UAS in a manner that endangers the safety and security of any
person or property; and not carrying dangerous goods other than in
compliance with the Aircraft (Carriage of Dangerous Goods) Rules,
2003 under the Act.

Penalties

Operation of UAS in contravention of the above requirements of
(i) prior permission to operate in the red and yellow zones, and
(ii) carriage of arms, ammunitions etc. are cognizable and
non-compoundable offences. For all other contraventions, the
maximum penalty provided is INR 0.1 million.

PLI Scheme

With a view to incentivize manufacturing of drones and drone
components to make India a global hub for research &
development, testing, manufacturing and operation of drones, the
Government introduced the Production Linked Incentive Scheme
(PLI Scheme) in September 2021.2
Pursuant to the PLI Scheme, all manufacturers of drones and drone
components whose annual turnover is above the below prescribed
threshold are eligible for certain incentives:

(INR in Million)







Indian MSME* and
startups
Indian Non-MSME
Drone Drone components Drone Drone components
20 0.5 40 10

Medium and Small-Scale Enterprises

PLI Scheme has a tenure of three years commencing from the
financial year 2021-2022 with the benefits available for three
consecutive financial years up to 2023-2024.

Exports

Since India is a member of three of the multilateral export
control regimes, including the MTCR, and an adherent of the Nuclear
Supplies Group, India has included the MTCR Control Lists in its
own dual use list of Special Chemicals, Organisms, Materials,
Equipment and Technology (SCOMET)3 to
prevent unauthorized export and use for military purpose or in
weapons of mass destruction. MTCR provides for regulation of export
by its members of UAVs capable of carrying at least a 500 kg
payload or carrying above a range of 300 km. MTCR also covers UAVs
that have an autonomous flight control and navigation capability or
capability of controlling flight out of direct vision range,
involving a human operator and incorporating or designed to
incorporate an aerosol dispensing mechanism with a capacity greater
than 20 liters.4

Also read https://cfo.economictimes.indiatimes.com/news/insight-decoding-indias-export-controls-for-dual-use-items/63925559

In India, the export of UAVs is regulated by the Director
General Foreign Trade (DGFT) under the Ministry of
Commerce pursuant to its SCOMET policy. An export license must be
procured from the DGFT before exporting UAVs under the SCOMET
policy. Exports of UAVs and their related components and
specifically designed equipment are subject to specific export
authorisations to be obtained from DGFT when intended for civilian
use and from the Ministry of Defence when the item falls under
India’s Munitions list, being Category 6 of SCOMET list.

Significantly, unlike the MTCR, which provides guidelines for
UAVs carrying at least 500 kg payload or carrying above a range of
300 km, SCOMET does not provide for any thresholds in terms of
weight or range for the UAVs. Hence, all UAVs would fall within the
ambit of SCOMET and would require export authorisations for their
export, transfer, re-transfer, brought-in-transit, transhipment of
and brokering.

Imports

Import of drones is also regulated by DGFT. With effect from
February 2022, DGFT has prohibited import of drones in
completely-built-up, semi-knocked-down and completely-knocked-down
form to promote homegrown production.5 Drone components,
however, can be freely imported. The specific exemptions to this
prohibition are import of drones:

  1. by Government entities, recognized educational institutions,
    R&D entities and drone manufacturers for R&D purpose
    subject to import authorization from DGFT in consultation with
    concerned ministries; and

  2. for defence and security purpose subject to import
    authorization from DGFT in consultation with concerned
    ministries.

Way forward

UAS governance is still in its nascent stage in India where
focus has only recently shifted to its manufacture and use. Given
such nascency, the extant regulatory regime is serving its purpose.
However, this nascent industry is now ready to take and wings and
as India moves towards achieving its objective of becoming a global
hub for drone manufacturing and its popular use, it would become
imperative for India to review the Rules.

Exports

Most importantly, if India is indeed to become a significant
player in export of drones, the SCOMET List must be reviewed to
provide for acceptable thresholds for UAVs. This would enable
export of UAVs below the regulated thresholds without attracting
licensing requirement.

Second, DGFT may consider introducing an open general license
for export of drones above the prescribed thresholds, subject to
identification of end users and destinations; establishment of
internal compliance programmes; post shipment reporting and so on.
A robust export control regime governing UAS will go a long way in
making India the desired drone manufacturing global hub.

Domestic Usage

One of the glaring infirmities in the existing Rules is the
absence of a provision to safeguard the privacy of the data
collected by the drones. As recognized by the Supreme Court in
Justice K.S. Puttaswamy and Ors. vs. Union of India (UOI) and
Ors.,6 Right to Privacy is now a fundamental right of
every citizen of India and must be secured by procedural safeguards
against excessive interference by the State. As stated above, all
drones are required to be registered on the digital sky platform.
The Rules provide nodal officers and law enforcement agencies
direct and unfettered access to this platform.

Significantly, the above mentioned UAS Rules provided for
express obligations on the operator to safeguard the privacy of
persons and property during its operations and to ensure the
privacy of individuals and their property while collecting video
footage or image. However, such provisions are missing in the
Rules, which superseded the said UAS Rules.

India has the potential for becoming the drone manufacturing hub
with established regulations governing the manufacture, use, import
and export of drones to add to its credibility. On the strength of
its robust, yet industry friendly regulatory regime, it can replace
China to become a responsible supplier of UAS in the region.

Footnotes

1. Drone Rules, 2021: https://egazette.nic.in/WriteReadData/2021/229221.pdf

2. PLI Scheme, 2021: https://egazette.nic.in/WriteReadData/2021/230076.pdf

3. SCOMET List: https://content.dgft.gov.in/Website/dgftprod/3b568abb-7484-4f43-9527-84593113a8d1/Updated%20SCOMET.pdf

4. MTCR Annex: https://mtcr.info/wordpress/wp-content/uploads/2021/10/MTCR-TEM-Technical_Annex_2021-10-08.pdf

5. Import Policy: https://content.dgft.gov.in/Website/dgftprod/7d5fd1eb-ad39-4c99-b760-014223657469/Eng-Notification%2054%20dated%209%20Feb%202022%20ITC(HS)%202022%20_with%20Annexures.pdf

6. Justice K.S. Puttaswamy and Ors. vs.
Union of India (UOI) and Ors., (2017) 10 SCC 1: https://main.sci.gov.in/supremecourt/2012/35071/35071_2012_Judgement_26-Sep-2018.pdf

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.



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