In response to this May’s unprecedented usage of drones during clashes with Pakistan, India is planning to roll out a ₹20 billion incentive package aimed at bolstering its domestic drone industry, according to multiple government and industry sources. The three-year scheme is designed to reduce dependency on foreign components and spur development in both civil and military unmanned aerial systems.

The upcoming programme will encompass manufacturing of drones, key components, software development, counter-drone systems, and associated services. It marks a substantial expansion compared to the modest ₹1.2 billion Production-Linked Incentive (PLI) scheme launched in 2021 that struggled to catalyse growth within startup circles. The new initiative is intended to strengthen a drone ecosystem capable of withstanding and responding to modern defence demands.

India’s renewed focus follows its assessment of a four-day border skirmish in May—the first time both nations deployed drones and loitering munitions at scale—highlighting vulnerabilities tied to reliance on foreign-produced components. Under the new incentive structure, New Delhi aims to ensure that at least 40% of critical drone components are manufactured locally by the end of fiscal 2028, thereby curbing dependence on Chinese-made motors, sensors, and imaging systems.

Defense Secretary Rajesh Kumar Singh underscored the strategic importance of the measure, explaining that “we need to double down on our indigenization efforts to ensure that we build a large, effective, military drone manufacturing ecosystem.” While the civil aviation ministry will oversee the rollout, the framework includes provisions to encourage sourcing domestically through additional incentives for manufacturers.

Security analysts say the move aligns with earlier reports indicating India could invest up to $470 million in UAVs over the next 12–24 months, signaling a pivot toward self-reliance in drone production amid a rivalry with Pakistan—whose drone program is backed by China and Turkey. India’s adoption of a more aggressive incentive-based approach reflects a larger strategic recalibration designed to establish resilience in aerospace and defence sectors.