Cabinet Approves Modified UDAN with ₹28,840 Crore Outlay

NEW DELHI — The Union Cabinet approved a modified version of the UDAN (Ude Desh ka Aam Naagrik) regional aviation scheme on 22 September 2026, allocating ₹28,840 crore for the next phase. The decision follows a series of Memoranda of Understanding (MoUs) signed with 21 states and union territories, including Andhra Pradesh and Chhattisgarh, to expand air and helicopter connectivity to underserved regions.

Modified UDAN to boost regional air links

The revised UDAN, often referred to as UDAN 2.0, aims to increase the number of scheduled flights to remote and economically weaker areas. The scheme will provide financial support to airlines operating on short‑haul routes, with subsidies covering a portion of the fare and operational costs. The central government will also provide a 70 per cent subsidy on the cost of aircraft maintenance and infrastructure upgrades for participating airports.

Cabinet’s outlay and allocation details

According to the cabinet order, the ₹28,840 crore outlay will be distributed over a five‑year period. The allocation includes ₹12,500 crore for direct subsidies to airlines, ₹5,000 crore for airport development, and ₹11,340 crore for ancillary services such as navigation aids and terminal upgrades. The Ministry of Civil Aviation will oversee the disbursement of funds and monitor compliance with the scheme’s eligibility criteria.

State‑level MoUs and regional focus

In the days following the cabinet approval, several states signed MoUs to implement the modified UDAN. Andhra Pradesh entered into an agreement with the Ministry of Civil Aviation to connect 12 new airports and 18 heliports, with a projected investment of ₹1,200 crore. Chhattisgarh signed a MoU to expand air and heli connectivity across 10 districts, allocating ₹800 crore for infrastructure development.

Other states, including Karnataka, Maharashtra, and Uttar Pradesh, also signed agreements, each committing to upgrade at least five airports and establish new feeder routes. The MoUs outline a joint responsibility model, where states will provide land and local support while the central government supplies financial assistance and regulatory facilitation.

Implementation framework and monitoring

The Ministry of Civil Aviation has issued a circular detailing the eligibility criteria for airlines and airports. Airlines must meet safety and operational standards set by the Directorate General of Civil Aviation (DGCA). Airports must have a minimum runway length of 1,200 meters and be capable of handling aircraft with a maximum take‑off weight of 19,000 kilograms.

To ensure transparency, the Ministry will publish quarterly reports on the utilisation of funds and the progress of route development. The reports will be available on the official portal of the Ministry of Civil Aviation and will be subject to audit by the Comptroller and Auditor General.

Impact on regional economies

Proponents argue that the modified UDAN will stimulate economic growth in remote areas by improving access to markets, healthcare, and education. The scheme also aims to create employment opportunities in the aviation sector, with an estimated 10,000 jobs expected to be generated across the participating states over the next five years.

Critiques and concerns

Some critics have raised concerns about the sustainability of the subsidies, citing the high cost of maintaining low‑fare routes. The Ministry has responded that the scheme will be reviewed annually to adjust subsidies based on route performance and passenger demand.