1. Background

The notification of the Unmanned Aircraft System Rules, 2021 (UAS rules), earlier this year in March, had met with immense resistance from stakeholders of the drone industry. The same reeked of License Raj, given its requirement of applying for numerous certificates and permits. Accordingly, the UAS rules were argued to be stifling Research & Development (R&D), hindering startups in the industry, and restricted foreign companies from operating drones, thereby creating roadblocks for foreign investments.

Now, recognising the immense potential of economic growth and employment generation offered by the drone industry, the Ministry of Civil Aviation (MCA) has prepared the draft Drone Rules, 2021 (draft rules), which are set to replace the UAS rules. These draft rules do better than the UAS rules in providing an enabling environment for the drone industry. A few key points to be noted in this regard have been given below.

    • Maximum penalty under the rules has been reduced to INR 1 lakh, from 5 lakh and higher;
    • Weight limit for categorization as a drone has been increased from 300 kgs, to 500 kgs;
    • Many approvals and forms for various drone business activities have been removed;
    • Fees for issuance of certificate of airworthiness, transfer of unique identification number, among other purposes have been reduced to nominal levels, i.e., from a maximum fee of INR 10,000, to a maximum fee of INR 1000;
    • Yellow zone limits have been reduced from 45 kms, to 12 kms from airport perimeters; etc.

However, the rules can be further improved by incorporating the recommendations given in the subsequent section. NCL expresses its gratitude to the MCA, for inviting comments and suggestions on the draft rules.

2. Analysis

The proposed amendments appear to have well-intentioned objectives of promoting Ease of Doing Business (EoDB) in the drone industry. As has been discussed above, the draft rules do much better than UAS Rules. However, the same can be improved, basis the recommendations given below.

2.1 Upgrade to Regulatory Impact Assessment

Part XI of the rules provides for the Central Government to bi-annually evaluate the economic impact of the rules, and as well as the measures taken to further the EoDB in the sector. This is certainly a welcome move, and NCL congratulates the MCA for proving such ex-post evaluation of the rules.

However, such evaluation needs to be preceded with ex-ante Regulatory Impact Assessment (RIA). Many committees have undertaken various studies at the instance of the government to enable EoDB in the country, most of which have called for institutionalizing RIA. Few relevant examples have been given in the table below.

Previous Committees’ Reports Referred
Commissioned by
Chaired by
2011 Report of the Working Group on Business Regulatory Framework Planning Commission Arun Maira
2013 Report of the Committee for Reforming the Regulatory Environment for Doing Business in India Ministry of Corporate Affairs M Damodaran
2013 Report of the Financial Sector Legislative Reforms Commission Ministry of Finance BN Srikrishna
2016 Report of the Expert Committee on Prior Permissions and Regulatory Mechanism DIPP, Ministry of Commerce and Industry Ajay Shankar

Conducting RIA minimises the risk of regulations imposing unintended adverse costs/consequences on different stakeholders. It also helps in ensuring that  the regulations meet their regulatory  objectives, and its compliance costs do not outweigh its envisaged benefits.

Notably, the Insolvency and Bankruptcy Board of India (IBBI), and the Financial Stability Development Council (FSDC), have already adopted RIA in regulation making for their respective sectors. Their relevant provisions in this regard have been given in the table below.

R. No.
IBBI Provision
S. No.
FSDC Provision
5(1) The Board shall cause an economic analysis of the proposed regulations to be made. 52(2)(e) Every draft of the proposed regulations which is published under this section must be accompanied by a statement setting out an analysis of costs and an analysis of benefits of the proposed regulations.

The economic analysis shall cover the following:

(a) expected costs to be incurred by, and the benefits that will accrue to, the society, economy, stakeholders and the Board, both directly and indirectly on account of the proposed regulation; and

(b) how the proposed regulations further strengthen the objectives of the Code.

54 It states the Standard of analysis of costs and analysis of benefits.

Similar provisions may be adopted by the MCA in such and future regulation making. Furthermore, the rules provide for setting-up a Drone Promotion Council, which shall involve industry experts and academic institutions in policy advice. While this is a good practice, it can be improved further by institutionalizing public stakeholder consultations on proposed policy and regulations. The same also forms an important part of conducting an RIA, which recommends a two-stage stakeholder consultation mechanism. Other recommendations of the committees with respect to regulation making, may also be adopted by MCA.

2.2 Don’t lose sight of privacy

The draft rules miss out on providing for protection of any personal data collected by drones, and for providing provisions pertaining to privacy protection. Select provisions which are amiss from the rules, as opposed to the UAS rules have been tabulated below.

R. No.
UAS Rules
27(1)(h) An authorised unmanned aircraft system operator shall be responsible for ensuring the privacy of a person and its property during operation. 
28(16) The Unmanned Aircraft System Operator shall ensure protection of any data gathered during the operation by suitable procedures and appropriate applications and hardware in place to securely store or dispose of such data.
28(17) The Unmanned Aircraft System Operator shall ensure that the data gathered during operation is not shared with any third party without the prior permission of the person to whom the data pertains.
38(2) An imagery or data may be captured by an unmanned aircraft after ensuring the privacy of a person. 

Furthermore, the rules do not adequately lay down safeguards and conditions for government’s access to data generated on digital sky platform. Rule 23 of the rules merely grant access right to state governments and Law Enforcement Agencies (LEAs). Notably, under the UAS rules, only LEAs were granted access to UAS traffic management data.

Such provisions become especially important given that privacy has been declared to be fundamental right, and India currently lacks a dedicated personal data protection law, and the Personal Data Protection Bill 2019 (PDPB) is still pending with the Joint Parliamentary Committee (JPC). India also lacks a regulatory framework for governing Non-Personal Data (NPD).

2.3 Focus on other related ailing industries as well

While the rules are likely to bring much needed impetus to the drone industry, it is important for the government to not ignore other related ailing industries, such as the helicopter industry. Experts opine that the a major one of the reasons for India’s helicopter industry not being able to take flight, is account of heavy-handed regulations, and enabling rules such as these, are required for giving it impetus.

There purportedly exists a lack of infrastructure and flexibility in regulations, which are severely restricting the helicopter industry’s potential to contribute to tourism, mining, corporate travel and medical services. Notably, even the government has acknowledged the sub-optimal regulatory landscape of the industry.

2.4 Other recommendations

Other recommendations for the optimal utilization of drone technology have been given below.

    • Awareness generation amongst relevant stakeholders on the benefits of drones;
    • Skill development of players in industries having the potential of using drones;
    • Build adequate infrastructure needed for R&D and operation of drones;
    • Undertake training programs for drone pilots;
    • Ensure that security concerns are balanced with the possible benefits;
    • Attract investments for building drone and anti-drone technology;
    • Invest in developing use cases of drones for societal good;
    • Forge bi-lateral partnerships with others key countries for different objectives;
    • Promote coordination between the proposed Drone Promotion Council, and its counterparts in other countries;
    • Pursue industry level cooperation with other countries;
    • Encourage drone manufacturing in India, instead of mere assembly; and
    • Ensure in-spirit implementation of the rules.