Drone sector seeks policy clarity, export push in Budget 2026-27

As India prepares for the Budget 2026, the country’s fast-evolving drone sector is watching closely. After years of regulatory uncertainty, supply chain disruptions, and shifting policy frameworks, the industry now stands at a crucial inflection point. The upcoming Budget is widely seen as an opportunity to consolidate recent gains and position India as a serious global player in defence and dual-use drone technologies.

An Industry Emerging from Disruption

Over the past few years, India’s drone ecosystem has undergone a fundamental transformation. Once dominated by import-dependent assembly models, the sector has been forced to rethink its foundations amid geopolitical tensions, supply chain vulnerabilities, and tighter security norms.

“The Indian drone industry is emerging from a critical phase of disruption, one that has fundamentally reshaped its dominant business model,” said Sai Pattabiram, Founder and Managing Director of Zuppa, a defence drone technology company.

According to him, the renewed focus on indigenous component manufacturing, cybersecurity, and trusted hardware is redefining how Indian firms operate. “With a sharper focus on indigenous component manufacturing, cybersecurity, and a growing recognition of drones as dual-use strategic assets, the sector is now at an inflection point,” he said.

This shift reflects broader national priorities around self-reliance, security, and strategic autonomy, particularly in defence, infrastructure monitoring, and border surveillance.

Budget Expectations: Incentives and Export Support

Industry leaders believe the upcoming Budget could determine whether India’s drone ambitions scale sustainably or remain limited to domestic demand.

“As we approach the Union Budget, we are hopeful of decisive policy support through Design-Linked Incentives, targeted PLI schemes, and export-focused incentives,” Pattabiram said. He also called for easing export restrictions under the SCOMET regulations to help manufacturers access global markets.

Lowering regulatory barriers and expanding financial incentives, he argues, would allow Indian drone companies to invest more confidently in manufacturing capacity, research, and international partnerships.

“The post-disruption ecosystem is not only addressing India’s sovereign needs in defence, infrastructure, and security, but is also solving challenges faced by governments worldwide, resilient supply chains, secure systems, and trusted hardware,” Pattabiram noted.

With countries increasingly wary of over-reliance on Chinese drone supply chains, Indian firms see a window of opportunity to emerge as alternative suppliers of secure platforms and components.

“With the right fiscal and policy backing, India has a real opportunity to evolve into a credible global alternative to the Chinese drone supply chain,” he said.

Beyond Assembly: The Push for Deep-Tech Innovation

While incentives for manufacturing have boosted local production, industry experts say the next phase of growth must focus on deeper technological capabilities.

Venkatesh Sai, Founder and Technical Director of Zuppa, believes Budget 2026 should recognise advanced computing and secure systems as strategic priorities.

“From a technology standpoint, the Union Budget 2026 can be transformative for India’s cyber-physical and drone ecosystem by recognising secure computing, real-time AI, and indigenous hardware as national priorities,” he said.

As drones are increasingly deployed in sensitive and mission-critical environments, vulnerabilities in software and electronics can have serious consequences. Sai argues that policy support must go beyond final assembly lines.

“Policy support must extend beyond assembly to deep-tech innovation, covering secure motherboards, real-time control computing, AI-driven autonomy, and cyber-resilient architectures,” he said.

Such investments are essential for building systems that meet global defence and aviation standards, while also protecting sensitive data and operational integrity.

Building Indigenous IP and Global Competitiveness

Another major expectation from the Budget is support for design-led engineering and intellectual property creation. At present, many Indian drone firms still depend on imported chips, sensors, and control systems.

“Incentives for design-first engineering, aerospace-grade manufacturing standards, and indigenous IP creation will allow Indian companies to build globally competitive systems from the ground up,” Sai said.

Industry leaders also want stronger frameworks for dual-use technologies, which can be deployed across defence, logistics, agriculture, and industrial automation.

“We also look forward to frameworks that support dual-use technologies, enabling seamless innovation across defence, mobility, and industrial applications,” he added.

Such convergence could help companies diversify revenue streams while accelerating technology development.

Certification, Testing, and Market Access

Beyond funding and incentives, the sector faces structural bottlenecks in certification, testing, and export approvals. Limited access to accredited testing facilities often delays product launches and international certifications.

“Investments in certification, testing infrastructure, and export enablement for trusted drone technologies can significantly shorten go-to-market timelines,” Sai said.

A more robust testing ecosystem would help Indian products gain faster acceptance in overseas markets, particularly in Europe, West Asia, and Africa, where demand for secure drones is rising.

Strategic Stakes for India

The stakes extend beyond commercial success. Drones are increasingly central to modern warfare, disaster response, infrastructure monitoring, and internal security. Control over their technology has become a strategic imperative.

“A future-ready Budget can accelerate this transition, enabling Indian deep-tech companies to compete globally while strengthening national security and technological self-reliance,” Pattabiram said.

Similarly, Sai emphasised the geopolitical dimension. “A technology-led Budget approach will not only strengthen India’s strategic autonomy but also position the country as a global hub for secure, intelligent cyber-physical systems,” he said.

A Defining Moment

As Budget 2026 approaches, the drone industry is seeking clarity, consistency, and long-term vision. After years of adjustment and realignment, companies are ready to scale, but only if policy and fiscal support keeps pace with technological ambition.

If the government delivers on incentives, export reforms, and deep-tech investment, India could move from being a fast-growing domestic market to a trusted global supplier of secure drone systems. For an industry that sits at the intersection of defence, technology, and manufacturing, this Budget may well define its trajectory for the next decade.