India Planning ₹2,000 Crore Drone Incentive to Boost Local Manufacturing

As per Reuters, India is preparing a ₹2,000 crore ($234 million) incentive scheme for civil and military drone manufacturers. The programme will span 3 years and support the production of drones, key components, software, counter-drone systems, and related services.

Triggered by Border Clash

The decision follows a 4-day military exchange with Pakistan in May 2025, during which both countries used drones extensively. It was the first time unmanned aerial vehicles were deployed at such a scale between the two nations.

This proposed investment is significantly larger than the earlier ₹1.2 billion production-linked incentive (PLI) scheme from 2021. The earlier scheme was aimed at supporting drone start-ups but faced issues around funding and research support.

The Small Industries Development Bank of India (SIDBI) will assist by offering low-interest loans for working capital and R&D. Additional incentives are expected for manufacturers sourcing components domestically.

Read more: India Plans to Become a Drone Leader by Filling Key Gaps!

Domestic Production Target Set for 2028

India aims to produce at least 40% of key drone parts locally by the end of FY 2028. While drones themselves are banned from import, components such as motors and sensors are still largely sourced from countries like China.

There are now more than 600 drone-related firms operating in India. Despite this, the sector continues to depend on imports for several high-value parts. The new scheme is to address this gap.

Reuters previously reported that India may spend up to $470 million on drones over the next 1 to 2 years. This would happen in phases, focusing on both procurement and domestic capability-building.

Conclusion

India’s proposed drone incentive scheme shows a shift towards building local capacity in response to recent military developments. The plan focuses on manufacturing, component supply, and reducing import reliance.

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