India is preparing to launch a $234 million incentive programme to boost its domestic drone manufacturing industry, both for civilian and military use, as it seeks to reduce dependence on imported components and counter Pakistan’s growing drone capabilities reportedly backed by China and Turkey.
According to three sources familiar with the matter, the programme will run for three years and focus on developing drones, parts, software, counter-drone systems, and services. The initiative is expected to be managed by India’s civil aviation ministry, though officials have not commented publicly.
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This strategic move follows a recent four-day clash with Pakistan, during which both countries deployed drones extensively for the first time. The episode has prompted concerns in New Delhi over the growing drone arms race between the nuclear-armed neighbours.
India has largely imported military drones in the past, especially from Israel. However, its domestic drone sector has made notable progress in offering more affordable systems for defence use, although it still relies on imports—mainly from China—for critical parts like motors and sensors.
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The upcoming scheme significantly exceeds India’s previous incentive of 1.2 billion rupees for drone startups in 2021. By the end of the 2028 fiscal year, the government hopes that at least 40% of key drone components will be produced locally.
Additionally, the Small Industries Development Bank of India (SIDBI) will offer low-interest loans to drone firms for research, development, and working capital.
Industry insiders estimate that over 600 drone-related companies are currently operating in India, and the new incentives are expected to further strengthen this ecosystem.