The Gunners look set to have a challenging summer in the transfer market with only limited funds available.
But former Arsenal winger Jimmy Carter says Emery should demand extra cash to sign the Foxes ace.
Maddison enjoyed an impressive debut Premier League season last term.
Leicester coughed up around £20m to sign the talented midfielder from Norwich and he didn’t disappoint.
“Arsenal boss Unai Emery has been told to sign James Maddison ”
The 22-year-old was an ever present and scored seven goals in 33 appearances.
His dazzling displays haven’t gone unnoticed and Manchester United are reportedly monitoring his progress.
Carter, however, wants Emery to get in there first.
“Lucas Torreira had a half decent season,” said Carter. “But he’s never going to be one who’ll create and carve open a defence.
“It’s the same for Granit Xhaka – and he’s more inconsistent. He’s not going to be the one that threads a brilliant through ball.
“He’s about breaking up play. For me, Arsenal are crying out for James Maddison to come in.
“But, whether or not Stan Korenke would open his cheque book and buy the likes of Maddison – who’d be around £70m – remains to be seen.
“They need big reinforcements all over the park. Defence wise they need to strengthen massively and they’re also short in midfield.
“Up front it’s not bad, if they can add one or two in the wide areas.
“But I’ve heard it’s only £40m [Emery will be given to spend].
“Where does that get you in this day and age? If you’re looking to compete, then you really need to be serious and sign some quality players that the fans have been crying out for.
“Let’s not forget Arsene Wenger was also stingy with his cheque book. It was only towards the end that he spent money on Alexandre Lacazette and Pierre-Emerick Aubameyang.”
Although Emery won’t have as much cash to splash as his rivals, one Arsenal legend thinks it could be a blessing in disguise.
Ex-midfielder Ray Parlour told Starsport last week that the club’s starlets will get a chance to impress.
“It’s another opportunity for these youngsters to get a chance,” Parlour said.
“Reiss Nelson is one who sticks out. You’ve got Emile Smith-Rowe as well.
“I think the fans love the youngsters to get an opportunity – and that’s a road Arsenal might have to go down.
“Everybody wants big signings, but it’s got to be the right player.
“£40m is not a lot, but you’ve seen what happened at Spurs where they didn’t go out and spend money.
“When Emery came in, he knew exactly what the situation was.”