Govt Rolls Out ₹1,998 Cr Incentive for Domestic Drone Manufacturing

Amid rising geopolitical and security challenges, India’s drone manufacturing industry is set to receive a major boost with a new ₹1,998 crore (USD 234 million) incentive programme announced by the government. This marks a pivotal policy shift aimed at accelerating the domestic production of drones and critical components, reducing dependence on Chinese imports, and matching the rapid drone advancements made by Pakistan with support from China and Turkey.

The three-year initiative will support the production of drones for both civil and military applications, as well as development of software, components, counter-drone technologies, and drone-related services. According to government and industry sources, this new push reflects lessons learned from the limited success of the earlier ₹120 crore production-linked incentive (PLI) scheme launched in 2021, which struggled due to startup funding constraints.

India’s urgency follows a high-stakes drone escalation with Pakistan in May, where both nations reportedly deployed unmanned aerial vehicles at scale for the first time. In response, India aims to domestically manufacture at least 40% of critical drone components by FY2028.

“India has historically imported military drones, especially from Israel, but a growing local drone industry is now offering cost-effective alternatives.”

Despite the growth, the country still relies heavily on Chinese imports for motors, sensors, and imaging systems. The new programme, led by the civil aviation ministry and supported by the defence ministry and SIDBI, will offer low-interest loans to support R&D and working capital needs. Over 600 drone companies in India stand to benefit.