India’s Big Push for Indigenous Drone Manufacturing: Rs 20,000 Crore Incentive Plan

In a landmark move to strengthen its defence capabilities and ensure self-reliance in cutting-edge military technology, India is preparing to launch a Rs 20,000 crore incentive programme aimed at expanding its domestic drone manufacturing ecosystem. According to a Reuters report citing senior government officials and industry sources, the plan is designed to respond to rising security threats, especially from Pakistan and China, and address the growing importance of drones in modern warfare.

This strategic initiative is not just about boosting production numbers; it represents India’s commitment to building a world-class, indigenous defence technology sector that can meet both military and civil requirements. It is an essential part of the government’s Make in India and Atmanirbhar Bharat (Self-Reliant India) vision.

Why Is This Move Necessary?

The decision to ramp up domestic drone production was reportedly triggered by a four-day conflict with Pakistan in May, during which both nuclear-armed neighbours used drones extensively against each other for the first time in their history. This unprecedented escalation highlighted the urgent need for India to develop, produce, and deploy sophisticated unmanned aerial systems (UAS) that can match or surpass those of its adversaries.

Indian Defence Secretary Rajesh Kumar Singh acknowledged this reality, stating:

"The lesson that we’ve learned is that we need to double down on our indigenisation efforts to ensure that we build a large, effective, military drone manufacturing ecosystem."

This admission reflects a clear recognition within India’s strategic circles that the battlefield of the future will be dominated by drones, loitering munitions, kamikaze drones, and AI-enabled surveillance systems. Without an indigenous capacity, India risks being dependent on foreign suppliers, which could compromise national security, especially during crises.

The Threat from Pakistan and China

India’s urgency is further underscored by Pakistan’s growing drone capability, which has benefited from extensive support from China and Turkey. China, in particular, has emerged as one of the world’s largest exporters of military drones, selling advanced models to numerous countries, including Pakistan.

During recent border tensions and cross-border skirmishes, Pakistan has used drones for surveillance, reconnaissance, and even delivering arms and narcotics across the Line of Control (LoC) and the international border. In May’s conflict, both sides reportedly deployed loitering munitions and kamikaze drones, marking a dangerous new phase in regional security dynamics.

China, on the other hand, has a highly advanced and mature drone manufacturing ecosystem. Its drones have seen combat use globally, and it continues to export both military and dual-use models widely. India needs to counter this strategic imbalance by building its own reliable, scalable, and export-ready drone industry.

Details of the Proposed Incentive Programme

According to sources cited by Reuters, the upcoming programme will:

• Run for three years to allow time for companies to scale production and innovate.

• Offer financial incentives for manufacturing drones, drone components, software, counter-drone technologies, and related services.

• Cover both civil and military sectors, recognising the dual-use nature of drone technology and its potential to transform industries from agriculture to logistics to public safety.

Two government officials and one industry executive, who spoke on condition of anonymity, confirmed the plan’s broad contours and intent to galvanise domestic production capacity quickly.

This approach mirrors India’s earlier Production Linked Incentive (PLI) schemes for electronics, smartphones, and semiconductors, which have already shown measurable success in building local manufacturing capacity.

Building a Robust Drone Ecosystem

A successful implementation of this plan will require far more than just subsidies and incentives. It demands a holistic approach that includes:

• Research and Development (R&D): Investing in next-generation drone technologies, AI, computer vision, communications, and autonomy.

• Supply Chain Development: Ensuring domestic manufacturing of critical components like sensors, batteries, motors, and avionics.

• Skilled Workforce: Training engineers, pilots, maintainers, and designers in cutting-edge drone technologies.

• Regulatory Framework: Streamlining rules for testing, certifying, and deploying drones for civil and military use.

• Exports: Positioning India as a competitive supplier of military and civil drones globally.

India’s defence and technology planners recognise these challenges. The incentive programme is expected to prioritise collaborative development between public sector giants like HAL and BEL, private defence firms, and start-ups that are already innovating in this space.

Recent Conflicts as a Wake-up Call

The recent India-Pakistan border conflict in May 2025 served as an undeniable wake-up call for New Delhi. It showcased not only the effectiveness but also the necessity of drones in modern military strategy.

Reports suggest that both sides used:

• Loitering munitions that can hover over targets before striking

• Kamikaze drones designed for one-way attack missions

• Surveillance drones for real-time intelligence gathering

Such systems can tip the tactical balance on the ground, especially in rugged border areas where traditional movement is difficult and dangerous. For India, which faces complex security challenges from both Pakistan and China, relying on imported drones poses unacceptable strategic risks.

Government's Broader Defence Strategy

This drone incentive scheme is part of a larger push for defence indigenisation under Prime Minister Narendra Modi’s Atmanirbhar Bharat policy. In recent years, India has:

• Banned import of hundreds of defence items to force domestic production.

• Launched Defence Industrial Corridors in Uttar Pradesh and Tamil Nadu.

• Boosted funding for DRDO (Defence Research and Development Organisation).

• Encouraged public-private partnerships in defence manufacturing.

The Rs 20,000 crore drone programme is expected to follow this template, leveraging both public sector expertise and private sector agility.

Civilian Applications and Economic Impact

While military needs are the most urgent driver, the programme will also focus on civilian drone applications. This is because:

• Drones can transform agriculture with precision spraying and crop monitoring.

• They can improve disaster response with real-time assessment and delivery of relief materials.

• They enhance infrastructure inspection, logistics, surveying, and mapping.

• India’s government has ambitious plans for drone deliveries in remote areas to improve healthcare access.

By building a robust domestic drone industry, India can not only save foreign exchange but also create thousands of high-tech jobs, develop new industries, and position itself as a major exporter of drones to developing nations.

Counter-Drone Technologies

A critical component of the plan will be developing and deploying counter-drone technologies. As drone threats proliferate, India must:

• Detect and neutralise hostile drones quickly.

• Protect critical infrastructure such as airports, power plants, military bases, and government buildings.

• Build integrated air defence systems that can handle swarms and sophisticated attacks.

This means investing in:

• Jammers

• Laser-based interceptors

• Kinetic kill systems

• Radar and sensor networks

A comprehensive incentive scheme will ensure counter-drone technologies are produced in India, reducing reliance on foreign suppliers and improving national security.

Conclusion

India’s planned Rs 20,000 crore incentive programme for drone manufacturing represents a decisive, strategic shift in its approach to national security and technological self-reliance. By learning from recent conflicts and recognising the evolving nature of warfare, India is betting on building a strong, resilient, and innovative drone ecosystem at home.

If successful, this programme will not only strengthen India's military readiness against regional adversaries like Pakistan and China but also unlock massive economic opportunities in civil aviation, logistics, agriculture, and technology.

Ultimately, this move signals India’s resolve to be a global leader in unmanned systems, ensuring that its security, economy, and society are well-prepared for the challenges of the 21st century.

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