Big Push For Defence! Govt To Roll Out Rs 2,000 cr Plan To Supercharge Made-In-India Drones — Details

The government is set to introduce a Rs 2,000 crore ($234 million) incentive scheme to boost the local manufacturing of civil and military drones. The move is aimed at cutting dependence on imported parts and countering Pakistan’s expanding drone programme, which has backing from China and Turkey, according to three sources who spoke to Reuters.

The decision follows a four-day border clash with Pakistan in May, where both countries used drones on a large scale for the first time. Officials believe this marks the start of a new tech-driven arms race between the two nuclear powers.

The planned three-year scheme will back the production of drones, their parts, software, anti-drone systems, and related services, according to two government officials and an industry insider. All three spoke on condition of anonymity due to the sensitive nature of the plan.

This fresh initiative far surpasses the government's earlier production-linked incentive (PLI) scheme introduced in 2021, which had a modest outlay of Rs 1.2 billion (Rs 120 crore) and struggled to spur innovation or attract significant private investment.

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The civil aviation ministry, which is leading the effort, and the defence ministry did not respond to Reuters’ requests for comment.

Previously, Reuters reported that India was planning investments of up to $470 million (Rs 3,901 crore) in drone procurement and development over the next one to two years, with a focus on strengthening domestic capabilities through a phased approach.

Although India has traditionally sourced military drones from Israel—its third-largest defence supplier—the country’s drone industry has recently expanded, offering competitively priced solutions for defence applications. However, key components such as motors, sensors, and imaging systems are still largely imported from China.

Through this new incentive scheme, the government aims to localise at least 40% of critical drone components by the end of the 2027–28 financial year, the two officials told Reuters.

Commenting on the lessons learned from the May conflict, Defence Secretary Rajesh Kumar Singh recently stated, “There was extensive deployment of drones, loitering munitions, and kamikaze drones on both sides. It’s clear that we must accelerate our push for indigenisation to establish a robust and effective domestic drone manufacturing ecosystem.”

While the import of fully built drones is currently banned in India, components are still allowed. The new scheme is expected to offer additional incentives for companies that source parts locally.

In addition, the Small Industries Development Bank of India (SIDBI) will offer concessional loans to drone manufacturers to support working capital and research and development requirements, the officials added.

At present, more than 600 companies are engaged in drone manufacturing and allied services in India, according to an industry source involved in framing the new policy.