Drones Need Easier Skies

Good Morning. Now that India is under the tariff cloud, it has to reimagine its policies to meet the ambitions to become an economic powerhouse. One way is to do away with or ease rules and regulations that dog innovation. While India is supporting drones that have become ubiquitous from agriculture to military, the many permissions make it difficult for them to take commercial flight.

In other news, airlines are upping the ante for luxury travel with grand offerings to cater to their growing affluent clientele. Meanwhile, carmakers are pushing sales of older models this festive season with chunky discounts.

THE TAKE 

India Can Fly High If Drones Fly Low 

Last week, Mumbai police registered cases against five individuals for allegedly flying drones without permission during the Mahaganapati Aagman procession in Mumbai’s Lalbaug.

The youths were evidently trying to capture aerial visuals of the procession welcoming idols of Lord Ganesh to various pandals in dense central Mumbai for the annual Ganpati festival, at the end of the month.

“The five accused claimed they were recording the event, but drone activity was strictly prohibited. A case has been registered and further investigation is underway,” a Mumbai Police official told the Free Press Journal.

In May, two young men were picked up in north and south Mumbai for flying drones, for what clearly appears to be recreational purposes, but on the effective ground of committing a crime.

The last week has seen much fulmination by leading economic and other lights about what India should do as a response to the economic embargo that the United States is set to impose on India, were it not to stop buying Russian oil by August 27.

That is when tariff rates of 50% would take effect, as opposed to the already debilitating 25% in force as of last week.

Several voices have highlighted once again the importance of the genuine ease of doing business for local businesses and helping firms become more competitive.

Others have pointed out how India should focus on attracting more foreign tourists, numbers of which are dismally low right now.

This would mean a different kind of job creation though it is not clear whether someone who was polishing diamonds in Surat or stitching apparel could be managing the front office of a hotel small or big. Or helping out in the kitchen. Possible, but not easy.

Last August, Prime Minister Narendra Modi showcased the NAMO Drone Didi scheme, where young women were trained to use drones for spraying fertilisers on their crops. “This would make them integral stakeholders of their local farming supply chains and rural prosperity,” Modi had said.

The scheme was kicked off around January last year and involved providing 15-day training to fly drones and get a drone pilot license. Some 15,000 drones were slated for distribution to women across India at the time.

At the recent India-Pakistan border conflict, drones played a key role in the cross-border warfare. Many of those drones were made by private companies in India who most probably had no clue that there was ever going to be a military application for their products.

Three months ago, I spoke to Ankit Mehta, CEO at Coforge Technology, a Mumbai headquartered drone maker. When they started their company almost 20 years ago, drones were thought to be used for mapping and photography.

And then the 2008 terrorist attack on Mumbai happened and drones began to be used for law enforcement. But, it was the Ukraine-Russia war which showcased the use of drones as an important tool and weapon in warfare.

But drones, as many know, have multiple uses. They could be used for aerial photography or, with considerable and sophisticated modification, for bombs and such payloads. That explains why India’s police forces are constantly cracking down on drone operators unless they have secured prior permission from them.

On the other hand, China is ambitiously promoting its low altitude economy, or airborne devices flying at less than 1,000 metres. The Economist quotes China’s civil aviation authority saying the country’s low altitude economy will be worth $208 billion by the end of this year.

Over 2.7 million packages and 200,000 meals were delivered by drones last year, double of 2023. Several flying cars, which also use batteries, are being developed.

And some 2.2 million civilian drones were operating around the country, a 455% jump in five years, says the Economist, adding drones are performing a variety of tasks from transporting blood to spraying fertilisers.

Some of this is happening in India too but the scale is nowhere close. More importantly, as the Economist points out, most of China’s airspace is reserved for military use or subject to strict security constraints.

That makes it all the more striking that China is promoting the use of low-altitude aircraft, and revising rules accordingly. Six cities, including Shenzhen and Hefei, are being given a degree of autonomy in opening airspace below 600 metres for commercial activity.

Which brings us back to our enthusiastic young drone cameramen trying to capture an aerial view of the famed Lalbagh Cha Raja as he makes his way past joyous crowds on Mumbai’s packed roads.

Much innovation has happened in India’s drone industry too. But not as much as China and it surely has been tougher.

Imagine a young engineer who builds a small drone to do something imaginative only to get caught and hauled off to a police station.

Just like the cameramen who wanted to get some cool aerial pictures but forgot to go through the bureaucratic maze of filling up forms and securing permissions.

India has many battles ahead, including on tariffs and geopolitics. None of our problems can be solved in days or even months, however much we may expend our energy on social media, desiring so.

Freeing up the use of drones would be one example and instance of how we can unclog the innovation pipelines, bottom up.

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CORE NUMBER

147% 

The returns that early redeemers of Sovereign Gold Bond holders will get if they had invested in 2019-20 Series IX. The RBI has announced the dates for the premature redemption date for this series as well as 2020-21 Series V, which will be on August 11.

While the maturity period of these bonds are eight years, early redemption is allowed after the fifth year from the date of issue. The government has discontinued SGBs in Budget 2025 citing high cost of borrowing and the last issue was floated in February 2024.

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FROM THE PERIPHERY

Festival Car Discounts Zoom. Carmakers are offering high discounts ranging from ₹40,000 to over ₹1 lakh apiece, on mass-market models, starting this August. Older models of popular hatchbacks, sedans, and even select SUVs and MPVs are seeing such offers. Dealers say that discounting will clear space for festive launches, and help counter rising EMI costs.

How We Got Here: High discounts during the otherwise busy festival season is an indication of tepid demand. In July, passenger vehicle sales went down by 0.8% year on year; even as they grew on a sequential basis.

Implications: Federation of Automobile Dealers Associations (FADA) president CS Vigneshwar told The Core that July 2024 was a bumper sales month, and hence the numbers seem low. Sentiment is decent, he said, adding that the Trump tariff effect needs to be watched closely.

Airlines Roll The Red Carpet. Airlines are upgrading their premium experiences for travellers. British Airways brought back first class cabins, Singapore Airlines has similar plans for its Indian passengers. Air India is also retrofitting its Boeings with new seats and in-flight entertainment. 

The Scoop: The ‘experience’ offerings include checks-ins via Ipads, lie-flat beds, as well as luxurious onboard experiences like wine, cheese and unlimited caviar.

Trigger: Premium travel is much more in demand than economy travel. As per International Air Transport Association, international first class and business class travel grew by 11.8% in 2024 outpacing the 11.5% growth in economy. Asia Pacific’s premium passenger traffic saw the fastest growth at 22.8%.

PNB To Offload Rs 5,000 Crore Bad Loans. Punjab National Bank (PNB)’s MD and CEO Ashok Chandra said that it plans to sell 100 non-performing assets (NPAs) to asset reconstruction companies in FY26. The total book size of these NPAs could be anywhere between Rs 4,000 to Rs 5,000 crore.

Outcome: On an average, the bank expects to recover anywhere between 40-50% minimum from these loans. Chandra adds that while 100% recovery could be possible in some cases, a few others might see low recovery.

Future: The bank expects double digit growth from the second quarter onwards in the corporate loan segment. Going aggressive in this segment, the bank is speeding up the timeline for corporate borrowers by taking decisions within 15 days.

SEBI Proposes Lower Entry Bar For AIFs. Securities and Exchange Board of India (SEBI) proposed to relax norms for large value funds (LVFs) under the alternative investments funds (AIF) network. One of them is to reduce the minimum investment requirement to Rs 25 crore from the current Rs 70 crore.

Context: Cutting down the entry threshold would allow more domestic institutions like insurance companies. It will help diversify the investor base. Many institutional investments find the minimum investment levels restrictive, as per working groups.

Setting: The regulator also proposed removing the cap of 1,000 investors per AIF scheme for LVFs. It believes that the large ticket sizes and the accredited investor base are sufficient safeguards for the same.

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👥 THE TEAM

✍️ Zinal Dedhia, Kudrat Wadhwa, Katya Naidu | ✂️ Rohini Chatterji | 🎧 Joshua Thomas