India’s regional aviation strategy is entering a more ambitious phase, with the Union Cabinet approving a ₹28,840 crore outlay to significantly expand the UDAN (Ude Desh ka Aam Naagrik) scheme over the next decade. The scale-up reflects both the government’s intent to democratise air travel and its parallel push to build a domestic aerospace manufacturing base.

The UDAN scheme, launched to improve connectivity to underserved and unserved airports, has had a mixed operational record so far. Of the 649 routes that were operationalised, only about half remain active. Several routes were discontinued after airlines withdrew services once the initial three-year subsidy window ended. This has exposed structural challenges in regional aviation economics, particularly around load factors, infrastructure readiness, and fleet availability.

The revised framework attempts to address these issues directly. Financial support for airlines will now extend to five years, with additional incentives for operating from remote or low-traffic regions. This longer subsidy runway is aimed at improving route viability and reducing the financial stress on smaller carriers, which have struggled with delays in aircraft deliveries and airport readiness.

What marks a structural shift in this phase of UDAN is not just connectivity expansion but the integration of manufacturing ambitions. Civil aviation minister Ram Mohan Naidu indicated that global aerospace firms are actively evaluating India as a manufacturing base. Companies such as Embraer and Leonardo are exploring opportunities, supported by policy backing under the UDAN framework.

A key development in this direction is the partnership between Adani Group and Embraer to set up an assembly line for E175 regional jets, which could become India’s first commercial aircraft assembly facility. Separately, Adani is also working with Leonardo to build a helicopter manufacturing ecosystem domestically. However, these investments are conditional. Embraer has indicated that a commitment of at least 200 aircraft orders would be required to make the project viable, underscoring the importance of sustained demand generation through schemes like UDAN.

The government’s plan also includes infrastructure expansion, with 100 new airports and 200 helipads proposed over the next ten years. This aligns with the broader vision under “Viksit Bharat 2047,” which targets expanding India’s airport network to 350 airports. Increased connectivity is expected to stimulate economic activity in tier-II and tier-III cities by improving access to markets, tourism, and services.

From a policy standpoint, the scheme reflects a dual objective: enhancing regional mobility while catalysing domestic industrial capacity. The introduction of Udan Yatri Cafes at more than 30 airports, offering affordable food options, also signals an attempt to make air travel more accessible and inclusive.