A bribery investigation into a subsidiary of Reliance Industries is raising questions about corporate governance within India's rapidly expanding drone sector.
A probe by India's Central Bureau of Investigation has placed Reliance Industries' drone subsidiary, Asteria Aerospace, at the center of a bribery scandal, casting a shadow over the nation's burgeoning drone industry. The investigation alleges that a Reliance executive agreed to pay a $16,000 bribe to an aviation official to expedite import approvals for three drone applications, a development that could create legal and reputational headwinds for the conglomerate.
"Reliance has previously said it did not authorise nor was aware of any such transactions," the company stated, distancing itself from the alleged misconduct. The lawyer for the arrested official from the aviation watchdog has also contested his client's custody.
The investigation was initiated after a tip-off led to the arrest of officials from both the aviation regulator and Reliance Industries earlier this week. The core of the allegation is that a payment was settled to process applications for drone imports by Asteria Aerospace, a company that has otherwise been a poster child for India's domestic manufacturing push.
The scandal strikes at a sensitive time for Reliance, as its digital arm, Reliance Jio Platforms, which holds a 74% stake in Asteria, is preparing for what could be India’s largest-ever initial public offering. The probe not only threatens to tarnish the reputation of billionaire Mukesh Ambani’s conglomerate but also raises critical questions about governance and compliance within India's high-growth technology sector, which has been a key focus for Prime Minister Narendra Modi's government.
India's drone industry has been on a steep growth trajectory since the government liberalized its drone policy in 2021, creating a market that now includes approximately 39,000 permitted drones. These unmanned aircraft are used for a wide range of applications, from agricultural monitoring to infrastructure surveying.
Founded in 2011 by Nihar Vartak and Neel Mehta, Asteria Aerospace was acquired by Reliance in 2019 for $2.45 million. The company positions itself as a provider of "actionable intelligence from aerial data," serving clients across the agriculture, construction, telecom, and oil and gas industries with its fleet of over 400 drones. The company's revenue reflects this growth, having surged from 11 million rupees in fiscal 2020 to 400 million rupees ($4.24 million) in fiscal 2024.
Under the Drone Rules 2021, no uncrewed aircraft system can be operated in India without proper certification from the aviation safety regulator. Asteria has been a pioneer in this regard, touting itself as the first Indian manufacturer to secure three different types of drone certifications. One of its indigenous drones, the AT-15, was even featured at India's 77th Republic Day Parade, underscoring the company's prominence in the domestic industry. This bribery case, however, highlights the potential compliance challenges that companies face as they navigate the regulatory landscape in pursuit of rapid growth.
This article is for informational purposes only and does not constitute investment advice.
