Drone Products
Drone Production
Budget 2026 Will Give Drone Shakti a Boost through an Incentive-Based Manufacturing Scheme
The Budget
2026 will announce a manufacturing-focused incentive scheme under the Drone
Shakti initiative to accelerate indigenous production of drones through a
two-tier subsidy framework, government sources said.
“The
awareness is to give drone manufacturing the kind of lasting fiscal backing
that lets companies invest with certainty, instead of relying only on
output-based incentives.”
The scheme
will mark one of the government’s major multi-year fiscal commitments to the
drone industry, emphasizing its intent to position India as a global
manufacturing hub for civilian drones.
The proposed
scheme will run for five years and be aligned with the 16 Finance Commission
period, may include a fiscal commitment of about Rs 10,000 crore. The finance
ministry has cleared the proposal in principle and will approve spending for
the full duration upfront, sources said.
Unlike the
production-linked incentive scheme for drones and drone components, which is
linked to value addition and output, the new proposal combines
investment-linked incentives with manufacturing support to help build scale in
the industry.
Two-tier
subsidy structure
Under the
proposed agenda, the first layer of incentives will offer a 10–15 per cent
subsidy on capital spending for setting up drone manufacturing units and
related infrastructure, sources said. The support will be subject to conditions,
including a minimum turnover threshold and time-bound completion of
investments.
“The idea is
to support capacity creation upfront. Companies will be essential to complete
capital investment within a certain period of joining the scheme, so that
manufacturing capacity comes on stream quickly,” the source said.
The second
layer will offer a 10–15 percent subsidy linked to manufacturing output, aimed
at making domestically produced drones more cost-competitive against imports.
It aims to bridge the pricing gap that Indian manufacturers face, as more than
a few critical components are still sourced from abroad.
“The
manufacturing-linked incentive is meant to help Indian firms compete on price.
Without some output support, locally made drones struggle to match imported
alternatives,” the source said.
Graded
incentives, late entry allowed
The scheme will
include a graded incentive structure for companies that join later. Early
entrants may obtain the full benefit. “The incentive will be tapered for late
entrants, but they will not be put at a disadvantage. The scheme coverage will remain
for the full five-year period,” the source said.
Local
sourcing norms mandatory
To address
India’s requirement for imported drone components, the scheme will mandate
domestic content requirements of about 50–60 per cent as a main eligibility
criterion.
Companies that
depend heavily on imported components will not be able to benefit from all the
benefits.
“There was a
detailed discussion on domestic content. Local sourcing will be obligatory to guarantee
genuine manufacturing, not just assembly,” the source said.
While the
import of fully built drones is limited, Indian manufacturers continue to
depend on imported components such as sensors, avionics and propulsion systems,
limiting value addition within the nation.
Separate
from drone PLI
Officials
said the planned scheme will run distinctly from the existing drone PLI, which
was launched with a smaller expenditure and a focus on value addition rather
than upfront investment support.
“This is not
a replacement for PLI. It is a complementary scheme that identifies the requirement
for capital support and scale in a sunrise sector,” the government source said.
The Drone
Shakti initiative was proclaimed in the Budget 2022–23, as part of the
government’s broader push to advance the drone ecosystem. The initiative
focused mainly on endorsing drone acceptance and services instead of direct
manufacturing subsidies.
Under Drone
Shakti, the government will encourage the use of drones across sectors, such as
agriculture, land records, infrastructure, logistics, and mapping, while
supporting drone start-ups and skill development. A key thrust was the
promotion of Drone-as-a-Service models, allowing farmers, small businesses and
government departments to access drone services without owning the equipment.
However,
Drone Shakti does not offer direct fiscal incentives for setting up
manufacturing facilities.
Source:
Money Control
Saheel Singh
24 Dec 2025
