Karnataka has announced an Aerospace Policy for 2026-31 that will offer land-cost subsidies to the first three anchor investors in each of seven proposed aerospace clusters, while committing government funding for two new common testing and certification facilities.
Bengaluru | September 11, 2026
The policy provides a subsidy of up to 50% on land costs for qualifying early investors. The subsidy will be 50% for clusters outside Bengaluru and 25% for clusters in Bengaluru Urban and Bengaluru Rural. Companies entering a cluster after the first three eligible investments will not receive the land subsidy and will have to pay the full land price.
The state government has defended the cluster-based approach as a way to promote balanced regional growth, improve Karnataka’s competitiveness and support future-ready industrial infrastructure. The seven proposed clusters are spread across Bengaluru Urban, Bengaluru Rural, Vijayapura, Shivamogga, Mysuru, Hassan, Chitradurga and Chikkaballapura.
Four of the clusters — in Vijayapura, Shivamogga, Mysuru and Hassan — are planned as manufacturing hubs with runway access. These locations already have smaller airports covered under the regional connectivity scheme, or Udaan, allowing aerospace companies to test products on site, according to the policy details reported by Times of India.
The remaining clusters will have more specialised roles. Jangamakote in Bengaluru Urban will focus on avionics, drawing on Bengaluru’s electronics ecosystem and existing defence base. Chitradurga has been identified for a space cluster because of its proximity to the Indian Space Research Organisation’s Aeronautical Test Range. Chikkaballapura will focus on unmanned aerial vehicles and urban air mobility systems.
The policy also provides incentives for private developers of aerospace and defence parks under the Karnataka Industrial Policy, provided they develop at least 50 acres. The measure is intended to support the creation of larger industrial zones alongside the proposed sector-specific clusters.
A central component of the policy is the planned expansion of testing infrastructure. The government will fully fund two new common testing and certification facilities, in addition to one facility already planned at the Devanahalli Aerospace and Defence Park. The locations of the two new facilities will be selected after consultations with industry stakeholders, based on demand and regional requirements.
The policy says testing infrastructure is capital intensive and requires regular upgrades, making it difficult for individual companies to establish and maintain their own facilities. Private aerospace companies have consequently faced waiting periods of four to six months for product testing, according to the report.
The government may appoint an industry association or another suitable operator to assess requirements and manage the common facilities after they are established. The operating model will therefore depend on the stakeholder consultations and decisions taken during implementation.
Aequs executive chairman and chief executive officer Aravind Melligeri said taking the aerospace ecosystem beyond Bengaluru could strengthen Karnataka’s position in global aerospace manufacturing. Aerospace India Association director general S Dwarakanath said the state should focus not only on build-to-print manufacturing but also on design, technology, advanced manufacturing and higher value addition.
The policy’s immediate implementation milestones are the notification of the proposed clusters, identification of locations for the two new testing facilities and the opening of the subsidy window for the first three investments in each cluster.
