Government Approves Rs.28,840 Crore Outlay for the Next Phase of the UDAN Scheme

The Union Cabinet, on 25 March 2026, approved a budgetary allocation of Rs.28,840 crore over ten years (FY 2026-27 to FY 2035-36) for the next phase of the Ude Desh ka Aam Nagrik (UDAN) Scheme, reaffirming the Government’s commitment to strengthening regional air connectivity and expanding aviation infrastructure across the country. The proposed financial support is aimed at enhancing the commercial viability of regional air services while improving connectivity to unserved and underserved regions.

Under the proposed framework, Rs.10,043 crore has been earmarked as Viability Gap Funding (VGF) to support airline operations and maintain affordable airfares on regional routes. An additional Rs.12,159 crore has been allocated for the development of aerodromes, Rs.3,661 crore for heliport infrastructure, Rs.2,577 crore towards operation and maintenance support, and Rs.400 crore for the acquisition of two Dhruv helicopters and two Dornier aircraft. The proposed allocations are intended to strengthen the operational sustainability of regional aviation infrastructure while encouraging greater private sector participation.

The modified UDAN Scheme also proposes to expand its scope beyond conventional airport infrastructure by promoting the development of heliports and supporting seaplane operations. The next phase is expected to prioritise connectivity in remote regions, hilly areas and aspirational districts, thereby improving accessibility in geographically challenging locations and promoting multimodal transport integration.

The Government has outlined an ambitious target of developing 100 new airports and 200 heliports over the coming decade. The proposed expansion builds on the growth of India’s aviation sector, with the number of operational airports increasing from 74 in 2014 to 165, contributing to the country’s emergence as one of the world’s largest domestic aviation markets.

The continued expansion of the UDAN Scheme is also expected to generate wider economic benefits by supporting tourism, improving market access for agricultural and horticultural produce, facilitating exports and promoting employment generation across underserved regions. Since its launch, the Scheme has reportedly connected approximately 1.68 crore passengers through the participation of nine airline operators.

From an infrastructure and project finance perspective, the proposed expansion of the UDAN Scheme reflects the Government’s continued emphasis on targeted fiscal support for regional aviation infrastructure. The initiative is expected to create opportunities for airport developers, airline operators, infrastructure investors and State Governments while strengthening regional connectivity and supporting balanced economic development across the country.