However, the project could not fly beyond R&D and field trials as it hit regulatory bottlenecks. “Drone delivery could at best be considered for emergency healthcare and disaster relief. Pizza delivery was then out of the question,” said Vikram Singh Meena, founder and CEO of TechEagle. Two years later, TechEagle and Zomato parted ways, wishing each other well.
Even in healthcare, drones could not make any major headway as US-based medical drone delivery firm Zipline found out in 2019. The company that had partnered with the Maharashtra government, Serum Institute of India and online medical supplies vendor Medikabazar put its India operations “on hold” in January 2021. “Under the then existing set of rules, things were taking longer than the company wanted,” said Pavan Ananth, who looked after its work in India.
Well, that frustrating past now feels like an inspiring prologue for the Indian commercial drone services industry as the regulatory air clears up. There is renewed activity in the space in the last few months, with players finding synergies in fields ranging from logistics to land survey.
A few months ago, the Telangana government, in partnership with government think tank NITI Aayog, World Economic Forum and Apollo Hospitals, organised a mega pilot ‘Medicine from the Sky’ in Vikarabad. Several drone companies including TechEagle partnered with the likes of Flipkart, Dunzo and Blue Dart to conduct more than 350 flights covering 850 Km over 45 days. TechEagle delivered 200 doses of vaccines under a complete cold chain environment at 2.4°C. It has now partnered with the Meghalaya government and Smart Village Movement to deliver medicines in difficult terrains.
Zomato’s early experience with drones notwithstanding, arch rival Swiggy is trying its hand at drone delivery. Along with ANRA Technologies, it conducted 100 hours of trials of food package delivery via drones in Punjab and Uttar Pradesh in June this year.
The winds of change are being felt not just in the private sector but also in public service. In April 2021, the Centre launched a scheme called Svamitva to map land parcels in rural areas using drones to create accurate land records for planning and minimising property disputes. So far drone surveys have been completed in more than 85,000 villages.
“Year 2021 was the tipping point for the drone industry,” said Meena of TechEagle.
Sector unchained
A large part of this optimism is driven by the new Drone Rules that were notified on 25 August 2021 after the government did away with those published in March 2021.
“The industry had a sort of semi-legal status until the new rules came in,” said Smit Shah, director of Drone Federation of India (DFI). That has changed now, and as Mrinal Pai, co-founder of Skylark Drones, pointed out things are getting as simpler as how plain-vanilla vehicle registration works. “The earlier policy was more or less a non-functional one: Digital Sky (now a one-stop platform for all drone-related compliances) was not working, maps with information on where you can or cannot fly were not published and you needed a flight-wise permission even within green zones. Now maps are in the public domain, and once your drones are registered, you can fly them freely in the green zone, very much like how a vehicle registration works,” Pai said.
“Now one can do test flights without any approval in green zones below 400 ft,” said Meena of TechEagle. As the perimeter of the yellow zone (requires prior permission from air traffic controller) has been reduced from 45 Km to 12 Km around airports and clear demarcation for red zones (permission granted by the union government) has made “a large part of the country a green zone,” he said.
In addition to new drone rules, other policy changes also came through this year that will likely increase the uptake of drones across industries. On 3 November, Mineral Conservation and Development (Amendment) Rules, 2021, were notified by the ministry to mandate drone survey images for leases having an annual excavation plan of 1 million tonne or more or leased area of 50 hectares or more. Similarly in June, National Highway Authority of India (NHAI) made mandatory use of drones for monthly video recording of National Highway projects during all stages of development, construction, operation and maintenance.
DFI foresees the industry to grow exponentially, generating a revenue of ₹50,000 crore for drone manufacturers and service providers over 2021-26. From its current size of ₹180-200 crore, the services industry will likely account for 60-65% of the said revenue potential, said DFI’s Shah. Government estimates predict the services industry will grow to ₹30,000 crore in the next three years, generating over five lakh jobs.
In the line of sight
Door-to-door drone delivery as a daily convenience may still be a bit in the future, but the use of visual line of sight (VLOS) drone operations where the remote pilot maintains continuous, unaided visual contact with the aircraft, have come of age. VLOS operations allow surveillance and mapping and surveying that have applications in mining, construction, energy, urban development and land records.
“We started looking at the drone space two years ago. Even though the regulatory framework was not the smoothest, the promise of drones as a technology across various industries was well understood, which needed very little capex and training to start operating,” said Rajnish Kapur from Indian Angel Network that has invested in Skylark Drones.
Skylark’s Pai pointed out that earlier, only larger clients managed to get exemptions from Directorate General of Civil Aviation (DGCA) to use drones for their operations. “Now clients are not worried about doing anything illegal, and using drones for large-scale operations, not just for limited sites,” said Pai.
Skylark has operations in India, Middle East and Canada, and its clients include Tata Steel, UltraTech Cement, Saudi Electricity Company, Spring Energy and Reliance Infrastructure. Its revenue saw a year-on-year increase of 23% in FY20, reaching up to ₹2.6 crore, and Pai expects it to grow 3-4 times in FY22. The company raised$3 million from a pool of investors, co-led by InfoEdge Ventures and IAN, in their pre-series A round in 2021.
For VLOS operations, drones derive their value proposition from high-accuracy data collection. Skylark started off as a drone manufacturer in 2015 but soon transformed into a service provider with its own fleet. Since 2018, it has positioned itself as a drone software company that marries its drones with deeper analytics and insights.“Skylark’s model is drone-as-a-service, which is much easier to scale up than something that needs capex,” said Kapur of Indian Angel Network.
Aarav Unmanned Systems (AUS), an end-to-end drone service provider in the VLOS segment, has onboarded 4-5 new clients since the rules were notified. It is currently working with a number of partners, including Tata Steel, Hindalco, Adani and organizations such as Coal India and Survey of India. “We see an increase in demand as the large clients have better clarity on where drones can be deployed under the new rules,” said Vipul Singh, CEO of AUS.
Covid turned out to be a boon for Singh’s business as AUS turned profitable with revenues doubling to ₹6 crore in FY21. It is backed by a number of investors, including 3one4 Capital, 500 Startups and GrowX. So far it has raised $2 million in three rounds since 2016, and is hoping to raise capital of a value far greater than its current investment size.
Crystal Ball was first envisioned to provide drone solutions for the agriculture sector. However, fragmented landholdings and limited paying capacity of farmers made large-scale adoption difficult. Today, it is working with farmer producer organisations to help them consolidate their operations.
Along with the agriculture behemoth Syngenta, Skylark Drones started conducting pilots in 2019, helping them achieve 95% data accuracy for crop monitoring over three seasons in 1.5 years. They are currently working pilots with Mahyco, a hybrid seed company, figuring out modalities of the business—who owns or manages drones, leasing vs buying models, pricing point, and so on.
Drone delivery
While drone delivery pilots may have become bigger—in distance, time as well as payload—and more frequent over the last few years, commercial applications at a wider scale is yet to see the light of day.
The most immediate use of beyond-visual-line-of-sight (BVLOS) solutions, which are flights beyond the visual range, appears to be in healthcare. DFI’s Shah said drone delivery in India will get commercialised soon in rural healthcare because it’s far less risky and offered the most impactful use cases. Lower air and population densities in the countryside minimises operational risks. Even in urban and semi urban areas, the early application of drone delivery will be where it would make “life” rather than “commercial” impact, Shah said.
Today, a plethora of drone companies such as Skye Air, TechEagle and Redwing are eyeing the healthcare space where they plan to offer solutions to vexing issues that have so far gone unaddressed.
For instance, a paradox that the health industry faces in remote areas is access versus wastage: If you do not stock supplies, you lose lives, but if you do, you end up wasting a lot. Faster and cheaper two-way last-mile connectivity between rural primary health centres and district supply hub and diagnostic centres can be the solution here. Minal Goel, who is working with the Telangana government on Medicine from the Sky, throws in a caveat. “The drone delivery industry is yet to grow from the business point of view. It will take at least a few years to achieve large-scale adoption,” Goel said, adding that pricing has to be competitive with that of the general procurement system of the government. Also, delivering only emergency supplies may not allow companies to reach commercial viability. They may have to cross-subsidize that with routine healthcare delivery.
In the Telangana project, Skye Air conducted straight line pilots of 11 Km that were covered within 16-18 minutes. “If you cover 40 Km in 30 minutes with a rotary drone, you save 1.5 hours compared to the road, but that may not be enough. Only when you start covering longer distances would you achieve economy-of-scale,” said Goel.
A few companies do have faster, long-range hybrid drones but integration with the larger healthcare system is a challenge. For instance, local health personnel have to be trained to safely load and unload payloads. Payloads used in Medicine from the Sky did not test for this forward integration. Challenges are even bigger for hyperlocal deliveries. Most of the food and grocery delivery market is concentrated in populated urban pockets. “Drones might not even reach your doorsteps as the base infrastructure such as drone ports and corridors is lacking in cities,” said DFI’s Shah. Moreover, the economic feasibility of drone delivery for commercial items vis-a-vis Swiggy and Dunzo riders will have to be assessed, he added.
“For drones to become a viable alternative, a transformation of sorts in the business model would be needed, the same as when delivery companies introduced cloud kitchens. Drones would allow companies to set up bigger inventory stores, which are now set up at every 3-5 Km, at larger distances to cover a wider radius,” said TechEagle’s Meena. This will work like a spoke-hub distribution model, streamlining logistics and saving both cost and time, he added.
The pie in the sky is getting more real by the day.
