Used by the military for monitoring and imagery, drones have become popular worldwide in recent years, with people posting breath-taking videos on social media and e-commerce companies looking to use them for deliveries.
In India, however, it is illegal for the public to fly drones without the approval of government authorities, because of concern over the safety of other users of airspace and people on the ground.
Users of drones weighing more than two kilograms will need a security clearance, operating permit, unique identification number and a remote pilot licence, according to the draft regulations.
Drones have several commercial uses, such as in agriculture and mining, said Jayant Sinha, junior minister for civil aviation, adding that the policies were expected to encourage the drone industry.
The ministry has asked for public comments within 30 days, after which the regulations will be finalised. The policy is expected to come out by the end of the year.
The use of drones would be banned within a certain distance from airports, the country's borders and some areas excluded by the Home Ministry. Violators would be charged under provisions of the Indian Penal Code, according to the proposed rules.
Once the regulations are finalised, e-commerce companies would be allowed to use drones to deliver goods, said Civil Aviation Secretary RN Choubey, adding that the government was working on technologies to curb the use of rogue drones.
Aviation regulator Directorate General of Civil Aviation will oversee the use of drones once the rules come into effect.
(Reporting by Aditi Shah in New Delhi; Writing by Abhirup Roy)