India is set to launch a $234 million (INR 20 billion) incentive program aimed at boosting its domestic drone manufacturing industry and reducing dependence on imported drone components.
The decision follows a response to the recent four-day border clash with Pakistan in May after India blamed Pakistan for the Pahalgam attack. The conflict escalated into air strikes and missile exchanges but de-escalated after U.S. intervention. Both nations have since started increasing their military spending and investment.
The new program will span a period of three years and will support the production of drones, components, software, counter-drone systems, and related services. It represents an increase from the $14 million incentive scheme launched in 2021 to promote drone startups, which struggled to attract capital and invest in research and development. According to Indian officials, the program intends to localize at least 40% of critical drone components by the end of fiscal year 2028.
The initiative is spearheaded by India’s civil aviation ministry with support from the defense ministry, while the Small Industries Development Bank of India (SIDBI) will provide low-interest loans to help firms with working capital and R&D needs.
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India imports key components such as motors, sensors, and imaging systems from China, despite having over 600 companies active in the domestic drone sector.
Indian Defense Secretary Rajesh Kumar Singh recently revealed drones played an important role during the four-day border clash with Pakistan. He said, “We’ve learned that we must build a large and effective indigenous military drone ecosystem.”
