By: Agnishwar Jayaprakash, Founder and CEO, Garuda Aerospace
India’s drone manufacturing sector is experiencing unprecedented growth as enhanced Production Linked Incentive schemes transform the industrial landscape and attract significant global investment. The country’s comprehensive drone manufacturing policy framework represents a strategic shift toward establishing India as a global drone hub by 2030, driven by market-based incentives that are accelerating sector development.
Market-Driven Growth and Industry Framework
India’s drone industry is projected to reach a market size of ₹81,600 crore by 2025, with the global Indian drone market valued at USD 654 million in 2024 and expected to reach USD 1,437 million by 2029 at a 17% CAGR. The Production Linked Incentive scheme for drones and drone components has become fundamental to this growth, with incentive programs totaling ₹2,000 crore for the period 2025-28, representing significant expansion from the initial ₹120 crore allocation.
The scheme’s comprehensive coverage includes manufacturing of drones, components, software, counter-drone systems, and allied services, demonstrating an ecosystem-wide approach to industry development. Unlike other sectors where incentive rates decrease annually, the drone industry benefits from a constant 20% PLI rate across all three years, with minimum value addition requirements set at 40% rather than the standard 50%.
Addressing Import Dependencies Through Localization
The enhanced manufacturing incentives specifically target India’s current reliance on imported components, particularly addressing the 50-60% dependency on foreign-sourced drone parts. The localization strategy aims to produce at least 40% of critical drone parts domestically by FY 2027-28, with additional incentives for manufacturers that source components within India.
This localization effort is supported by financial mechanisms including low-interest loans from the Small Industries Development Bank of India to support working capital and research and development initiatives of drone technology companies. The initiative represents a fundamental shift toward domestic supply chain development, reducing dependency on foreign suppliers and building indigenous manufacturing capabilities.
Global Investment Attraction and Market Opportunities
The reformed policy framework has created substantial investment opportunities, with India attracting $145 million in drone sector funding and projecting market growth to USD 631.4 million by 2030, representing a CAGR of 28.1%. The volume of drones procured in India is projected to increase from 8,381 units in 2025 to 16,756 units by 2030.
The liberalized Drone Rules 2021, combined with the PLI scheme, has simplified regulations and eased operational restrictions, encouraging both domestic and international companies to establish production facilities in India. This regulatory transformation has positioned India to account for 5.3% of the global agriculture drones market in 2024.
Technology Innovation and Ecosystem Development
The incentive scheme extends beyond traditional manufacturing to include software development, drone leasing services, and counter-drone technologies, creating a comprehensive ecosystem approach. This strategy supports over 500 active drone-tech ventures in India, attracting significant investor interest and technological talent.
Investment concentration remains focused in major urban centers, with Bangalore emerging as the dominant hub due to its aerospace research and development talent pool. Chennai, New Delhi, Hyderabad, and Pune also attract significant funding, supported by strong industrial ecosystems and manufacturing capabilities.
Sector Applications and Market Segments
Agriculture and precision farming are anticipated to drive the largest demand for drones by 2030, with 40% of surveyed companies identifying this as the primary growth sector. Multi-rotor drones currently dominate the market segment (~45%) due to their versatility in urban mapping, agriculture, surveillance, and ease of operation. These drones require lower operator skill levels and can hover for detailed inspections, making them ideal for infrastructure, media, and precision farming applications.
Investment Patterns and Funding Trends
A healthy maturing ecosystem, with startups advancing beyond seed stages into growth and expansion phases, particularly in commercial applications, logistics automation, and agricultural drones.
Investment sources include a broad mix of individual investors and venture capital firms, with institutional and strategic investors showing increasing interest. The total funding recorded across cities stood at ₹762.05 crore, highlighting increasing localization of drone manufacturing and services capabilities.
Economic Impact and Employment Generation
The drone manufacturing sector’s economic impact extends beyond direct manufacturing benefits, attracting close to $49.7 million in start-up investments during fiscal year 2022-23—representing 300% growth from previous periods. Manufacturing companies in India could reach cumulative turnover of ₹900 crore within three years through comprehensive value chain development.
Employment generation potential is substantial, with the expanding ecosystem requiring skilled workforce across manufacturing, software development, data analytics, and specialized services. Integration of drone technology across sectors creates diverse employment opportunities while supporting broader technological advancement objectives.
Key Features of the Drone Manufacturing Incentive Scheme
Production-Linked Incentives (PLI): Manufacturers of drones and drone components are eligible for incentives linked to their incremental sales. This ensures that only performance-driven companies benefit, motivating consistent growth.
Focus on Domestic Value Addition: The scheme emphasizes the use of indigenous components, reducing reliance on foreign imports. This aligns with the “Atmanirbhar Bharat” vision, encouraging companies to establish local supply chains.
Inclusive Growth: The scheme has provisions for startups and MSMEs, ensuring that innovation is not restricted to large players but inclusive of smaller innovators who often drive disruptive ideas.
Ease of Regulatory Compliance: With digitized approvals, faster clearances, and streamlined licensing under DGCA oversight, the scheme removes bureaucratic hurdles that traditionally slowed down the aerospace sector.
Conclusion
India’s drone manufacturing incentive scheme marks a transformative shift in the nation’s industrial growth story, redefining the ‘Make in India’ narrative by fostering innovation, strengthening domestic capabilities, and drawing global attention. By supporting every layer of the ecosystem; manufacturing, components, software, and allied technologies; the initiative is laying the foundation for India to emerge as a leading global hub for drones. Beyond boosting local production, it is positioning the country as a key player in the international drone economy. With its strategic mix of incentives, simplified regulations, and focus on self-reliance, the scheme not only accelerates technological progress but also ensures sustainable growth and global competitiveness for India’s drone sector.
Garuda Aerospace stands as India’s most trusted and reliable drone company with a legacy of innovation, impact, and scale. From a historic launch by Prime Minister Narendra Modi and brand endorsement by cricket legend M.S. Dhoni, to global recognition with invitations to Davos in 2023 and 2024, the company has consistently pushed boundaries. With industry-first milestones such as securing the first-ever bank loan AIF, government subsidy, and being a PLI beneficiary, Garuda has built unmatched credibility, selling over 4,000 drones, completing 10 lakh flight hours, and serving 400 marquee clients including Adani, Reliance, TATA, ISRO, DRDO, Army, NTPC, IOCL, and ONGC. The company’s strength lies in its indigenous Make in India focus, 21 patents, and a tech-driven, performance-oriented culture powered by a 180-strong team—India’s largest drone fleet backed by 300 Centres of Excellence for after-sales support. With diversity in operations, robust local and global partnerships, and the trust of renowned investors such as VCAT, WFC, Ocgrow, Narotam Sekhsaria Family Office alongside international recognition like Elon Musk tweeting about Garuda—this profitable and sustainable enterprise continues to redefine the future of drones with innovation, reliability, and scale.