India is set to launch a major $234 million (INR 20 billion) incentive programme aimed at strengthening its domestic drone manufacturing industry for both civil and military use, according to the sources. The initiative is part of New Delhi’s broader strategy to reduce reliance on foreign components and counter Pakistan’s rapidly advancing drone capabilities, supported by China and Turkey.
The programme, which will span three years, is expected to cover the production of drones, critical components, software, anti-drone systems, and related services. It represents a significant upgrade from India’s earlier, smaller-scale 1.2 billion rupee scheme introduced in 2021, which struggled to attract investment for drone start-ups.
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This fresh push follows a four-day drone clash with Pakistan in May, which was the first large-scale deployment of unmanned aerial vehicles (UAVs) by both nuclear-armed neighbors. The incident exposed the strategic importance of drones in modern warfare and sparked a regional drone arms race.
India’s aim is to locally manufacture at least 40% of key drone components—such as motors, sensors, and imaging systems—by the end of fiscal year 2028. While the country has traditionally sourced military drones from Israel, its homegrown industry has started offering more cost-effective alternatives, though dependency on Chinese-made components remains an issue.
To boost domestic procurement, the government plans to offer additional incentives for firms sourcing parts locally. The Small Industries Development Bank of India (SIDBI) will support the initiative with low-interest loans for R&D and operational expenses. Currently, India has over 600 companies involved in drone manufacturing and related sectors, signaling strong potential for growth under the new programme.
