Regional air connectivity scheme UDAN gets huge budget boost, gets 27 per cent higher allocation for FY27

In a renewed push to improve air access to remote and underserved regions, the government has increased the allocation for the regional air connectivity scheme, UDAN, by 27 per cent.

According to the latest Budget documents, the UDAN scheme will be allocated ₹550 crore in the next financial year, up from ₹434.50 crore in 2025–26. The higher outlay is aimed at reviving unserved and underserved airstrips, strengthening regional connectivity, and expanding affordable air travel to smaller towns and remote areas.

The civil aviation ministry’s overall budgetary allocation will rise marginally to ₹4,699.92 crore in 2026–27, compared with ₹4,688.03 crore in the revised estimates for the current fiscal year ending March 31, 2026.


Of the ministry’s total allocation, ₹47.39 crore has been earmarked for Customs Cost Recovery (CCR) charges payable to the Airports Authority of India (AAI) and its subsidiary, AAI Cargo Logistics and Allied Services Company Ltd (AAICLAS), for airports in tier II and tier III cities. This provision is intended to reimburse the cost of deploying customs personnel at 27 designated airports, comprising 15 cargo terminals and 12 passenger terminals.

Meanwhile, the government has made no budgetary provision for the Production Linked Incentive (PLI) scheme for drones and drone components, despite expectations in some quarters that the incentive programme could be revived in the upcoming fiscal.

Regulatory bodies under the civil aviation ministry are also set to receive higher funding. The Directorate General of Civil Aviation (DGCA) has been allocated ₹342 crore, while the Bureau of Civil Aviation Security (BCAS) will receive ₹114 crore in 2026–27.

Finance Minister Nirmala Sitharaman presented her ninth consecutive Union Budget on Sunday.