Budget 2026 May Bring ₹10,000-Cr Boost for Drone Manufacturing

The Union Budget 2026 is likely to roll out a fresh incentive program for drone manufacturing under the Drone Shakti mission, according to a MoneyControl report. The scheme will focus on boosting domestic production of unmanned aerial systems through a dual-layer subsidy model. 

The report, citing government officials, stated that the main objective is to provide sustained fiscal support which gives manufacturers the confidence to make long-term investments, instead of depending solely on production-linked benefits.

The proposed program would represent one of the government’s most significant long-term funding efforts for the drone industry to underscore its ambition for establishing India as a key global base of civilian drone manufacturing. 

The five-year scheme, which is designed to coincide with the Sixteenth Finance Commission cycle, could entail an outlay of nearly ₹10,000 crore, with the finance ministry having given in-principle clearance and expected to sanction the entire spending envelope at the outset, it said. 

This comes in contrast to the existing production-linked incentive (PLI) program for drones and components, which rewards value addition and output. The proposed scheme blends capital investment incentives with direct manufacturing support, with the aim of enabling the sector to achieve scale more quickly. 

The officials, as quoted by sources, revealed that the proposed model envisages a two-pronged incentive structure, with the first component offering a 10-15% capital subsidy to support the establishment of drone production facilities and allied infrastructure. 

Eligibility would be tied to criteria such as meeting minimum revenue benchmarks and completing investments within a defined timeframe, the report said. 

The second component would extend a 10-15% incentive based on manufacturing output, designed to improve the price competitiveness of locally made drones versus imported alternatives. This measure aims to offset cost disadvantages faced by domestic players, given the continued reliance on overseas suppliers for several key components.

In addition, the scheme is also expected to include a graded incentive structure for companies that join at a later stage, the MoneyControl report added. 

“The incentive will be tapered for late entrants, but they will not be put at a disadvantage. The scheme coverage is likely to remain for the full five-year period,” the official sources told the news publication.

And to reduce reliance on overseas drone parts, the proposed scheme will require manufacturers to meet domestic value-addition norms of roughly 50–60% in order to qualify for incentives, it added. 

The government announced the Drone Shakti initiative in the Budget 2022-23 to develop the drone ecosystem. Primarily, it focused on promoting drone adoption and services rather than direct manufacturing subsidies. 

The government then encouraged the use of drones across sectors like land records, agriculture. Logistics, and mapping, etc.