UAV start-ups off to a flying start! A dozen start-ups have come up to exploit the huge business opportunity arising out of the increased commercial use of UAVs in India.
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How interesting and convenient it would be if you get your goods (bought online) delivered at your home by an Unmanned Aerial Vehicle (UAV), also known as drones? Or if the pizza, you ordered, comes flying at your doorstep. It sounds like scenes from sci-fi movies, but this is actually becoming a close reality with a handful of start-ups entering this new sector.
So far, the Indian armed forces have been using UAVs for intelligence gathering and vigilance at international borders. However, their requirement is increasing for different civil purposes, particularly in the film industry for taking aerial shots and agriculture for monitoring crop growth and spraying pesticides over a large tract of land.
"UAVs are very small and cost-effective machines. They fly fast, hence they can gather information fast and easily. Through UAVs, you can do any time-consuming task easily and quickly. Hence reducing the operational cost of the businesses," says Sheen Thomas, Founder and Managing Director, Glorod Avionics, and Secretary, Unmanned Systems Association of India (USAI), the association for the Indian unmanned systems industry. The use of jimmy jibs and helicopters, which are expensive, is fast getting replaced by UAVs.
Started in 2010, Glorod Avionics manufactures UAVs for aeromodellers, educational institutions and companies (into forest development, weather forecasting, etc.) and research institutes that carry out land, sea and air surveillance.
Moreover, the other areas where a start-up can enter is offering training on the design and development of UAVs to students interested in Aeromodelling (building and flying small unmanned aircraft), collecting and analysing data through aerial shootings for large companies especially in real estate and energy for surveying large areas, selling custom-made drones, kits and accessories, etc.
Vying for Opportunity
In the past two-three years, there are around a dozen start-ups that have come up to exploit the huge business opportunity arising out of the increased commercial use of UAVs in India.
Seizing the opportunity are ventures like Chennai-based Atoms & Bytes that sells custom-made drones, drone kits and accessories online; Bangalore-based Edall Systems that provides industry-oriented training of UAVs for engineering students and builds and supplies UAV components to Defense Research and Development Organisation and National Aerospace Labs; and Mumbai-based aerial photography and video production start-up Airpix that offers services to clients in real estate, hotels, films and media, advertising, and for services like city planning and disaster management using GPS and real time flight data analytics. As per estimates, the average break even period in the UAV segment is roughly around
"The UAV segment has a lot of potential. It will eventually grow and generate a lot of value. In three-five years' time, UAV will be the one of the most important innovations to have happened in retrospect. For a start-up, the big opportunity lies in the government tenders for border security, etc. Positively, the FDI limit has been increased to 51 per cent that will certainly going to have a positive impact on this segment in general," says Vikram Gupta, Founder and Managing Partner, IvyCap Ventures Advisors.
An avid aeromodeller, Venkatesh Sai, Founder, Atoms & Bytes, has been flying UAVs for the past 10 years and had developed an interest in UAVs as his father was also an aeromodeller. He started Atoms & Bytes early this year. His firm sells small UAVs that can be hand-launched like an aircraft and can take off and land vertically and looks like a spider, with rotor-fitted blades. Both types of UAVs carry cameras.
While the base drone is sold at Rs 15,000 all inclusive, the price can go up to Rs 1.7 lakh, based on the application and usage. The micro drones weigh less than 1 kg and can fly for 60 minutes, the small size drones weigh less than 15 kg and can remain in the air for more than two hours.
Atoms & Bytes raised Rs 20 lakh in March this year from Real Image Media Technologies, a film and TV technology firm. The company is currently in touch with angel investors from Bahrain and Dubai to raise further amount.
Similarly, Singapore-based Garuda Robotics, started by Pulkit Jaiswal, raised an undisclosed amount of venture capital last year and is in talks with other investors for subsequent rounds. Most of the start-ups in the UAV sector, including Edall Systems, are into multiple rounds of discussion with potential angel investors and VCs.
"One has to be very focused on a particular sector and to what level he will be scaling up in that sector. If focus and clarity are not there, the investor will not invest," adds Gupta.
Holding Back the Sector
The biggest challenge that may put the sector's growth on a back foot is the absence of a regulatory authority for UAVs in India. Till date, there are no guidelines issued by the aviation regulator Directorate General of Civil Aviation (DGCA) for flying, manufacturing, buying and selling of UAVs in India.
"This is a very sensitive technology and can be misused. This can infringe on the privacy of individuals, organisations and the nation. The DGCA has regulations for manned flights only. In the defence side, there is an organisation called the Center for Military Airworthiness & Certification (CEMILAC) that certifies and regulates UAVs that are used in defence. Some parts of CEMILAC's regulations are also applicable to civil airspace for light UAVs with a speed equal to or less than 130 km/hour with a range of 500 meters or an altitude of 120 meters. To fly these light UAVs, one has to take the permission of the local police station," says Thomas. Currently, USAI is involved in getting more people as its members through seminars and in due time draft guidelines and submit it to the authorities.
The government, on the other hand, is referring other countries to draft regulations with growing demand for UAVs in the commercial segment. Moreover, the US e-commerce giant Amazon is planning to use its "Prime Air Drone' by Diwali this year to deliver packages with trials in Mumbai and Bangalore. This has caught the government's attention that may trigger guidelines for UAV usage much before than people's expectations.
"Proper regulations will increase civil applications of UAVs like delivering blood from a blood bank or a hospital to the patient. There should be clarity on limitations in terms of height and range in which one can operate UAVs and clearances required," says Pritam Sahu, Co-Founder and Director, Edall Systems.
Most of the start-ups import components like video transmitter and remote control, which should be approved by Wireless Planning and Coordination Wing, Ministry of Communications and IT, while some components are outsourced for manufacturing. Later the components are assembled to create a UAV.
"We source electronic components from Taiwan because components are cheap there. Getting a readymade system, fitting it and flying it take around two-three months. Building it from the core is very tough, everything, including the hardware needs tuning and testing. But if someone is importing parts from abroad, assembling it and learning to fly – the whole process would not take more than a week," says Sai. Alternatively, UAVs can be adjusted to auto mode with a specified altitude, which will record and transmit the video to you and will come back safely.
Apart from selling UAV along with its accessories, providing after sales service to customers also forms the revenue streams for UAV start-ups. "After-sale service works great for us as we get a lot of returning customers. They come to us again to buy accessories, components, etc. In terms of revenue contribution, drones contribute around 40-45 per cent, the accessories contribute around 20-25 per cent and the remaining comes from our after sales," says Sai who sells drones worth Rs 5-6 lakh every month.
On a Positive Path
Although a very miniscule percentage of Indian made drones are supplied to the army, with the new government and once the regulations are in place, one can expect the ease of selling to the defence forces as well. "There will be an increased use of this technology than hindrances. But if the regulations are not there, there will be issues around the sector's growth," says Gupta.
Ideal Systems for the next few years will continue to focus on working with defence labs from where the company gets maximum revenue. It also recently forayed into home automation for customers to control their home appliances from anywhere using the Internet.
By November, Atoms & Bytes will be launching the new UAV called Clear Shot with Eco and pro variants. In addition, it will be launching a glider for agriculture surveillance.
The advantage India has against other countries in the UAV sector is its huge population. The larger the population, the larger the need and the larger the sector's growth. Certainly a huge industry can be developed around this technology, but it will take time to gradually evolve.