India’s drone industry is growing fast, but component dependence, procurement cycles and export barriers threaten its global rise over time.
On August 14, 2026, the Ministry of Defence signed contracts worth about ₹1,577 crore with Tata Advanced Systems and NIBE for loitering munitions for the Army's artillery regiments. The order covers 84 launch systems and 840 munitions with a range of up to 100 kilometres, and Tata's chief executive called it the largest single loitering-munition contract any Indian service has placed. A few days earlier, the listed drone maker ideaForge reported quarterly revenue of ₹68.6 crore, about half of the ₹141 crore it booked in the previous quarter. It also said that global supply chain disruptions and component availability had been causing problems since early 2026.
Those two announcements capture the tension in India's drone push. Since Operation Sindoor in May 2025, drones have moved closer to the centre of Indian defense planning, and political ambition has grown with them. In March 2026 the Defence Minister, Rajnath Singh, said that India “must work in a mission mode to emerge as a global hub of indigenous drone manufacturing in the next few years.” The evidence suggests that domestic military demand is now large enough to matter. It is not yet steady enough, or built on a deep enough component base, to produce a globally competitive export industry. The binding constraints concern less how many drones the armed forces order than how the orders arrive, how much of the value is actually made in India, and whether foreign markets are as open as the rhetoric assumes.
The policy foundations were laid in quick succession. The Drone Rules, notified on August 25, 2021, cut the number of forms from 25 to five and the types of fees from 72 to four, and removed restrictions on foreign ownership. A production-linked incentive (PLI) scheme followed, worth ₹120 crore over three years. The Civil Aviation Ministry said this was nearly double the combined turnover of all domestic drone makers in 2020-21, and projected that turnover would rise from ₹60 crore to more than ₹900 crore by 2023-24. On February 9, 2022, the Directorate General of Foreign Trade prohibited imports of drones in built-up or knocked-down form, with exceptions for research, defense and security. Imports of drone components were declared "free". That overlooked design choice protected final assembly, while the components that carry most of the technology and much of the value stayed open to imports.
The results show that split. In March 2025 the government said drone-sector turnover had grown seven-fold under the PLI scheme, though the release gave no absolute figures. In an April 2025 parliamentary reply, the Minister of State for Civil Aviation said the scheme had disbursed about ₹98.32 crore and that, according to manufacturers' own data, 39 per cent of flight controllers in small drones came from China-based suppliers. Estimates of import dependence and market size differ. Sources briefing on a proposed successor scheme put imported components at 50 to 60 per cent, alongside industry estimates of a ₹12,000–14,000 crore market. The Drone Federation India, by contrast, values the market at ₹4,500 crore. Its president said most smaller firms import more than half their components, while “the top 10% players, who have 80% market share, are 70% indigenous.” When even the baseline is disputed, claims of rapid indigenisation should be read with care.
In the military segment, reliance on imported parts has run straight into security concerns. In February 2025 the defense establishment scrapped three contracts for 400 Army logistics drones worth over ₹230 crore because of Chinese components, and asked industry bodies to warn their members against sourcing such parts. Accounts of the 2024 incident in which an Army drone strayed across the Line of Control differ: one official source in that report called it a probable technical glitch in an otherwise well-regarded fleet, while other officials told a different outlet that it had been hacked through its Chinese components. The same reporting noted that the ministry had required, from November 30, 2023, that at least half the value of materials, components and software in military drones be indigenous, but that no Indian body had the mandate to certify indigenous-content percentages. A defense official quoted there also warned that removing Chinese parts would raise costs in the short term. That trade-off between security and price runs through everything that follows.
Operation Sindoor then made drones an operational priority as well as a procurement headache. The government said loitering munitions destroyed high-value targets, including radar and missile systems, and credited an integrated counter-drone grid and air-defense systems with neutralising Pakistani drone and missile attacks. At an official briefing on May 9, 2025, Pakistan was said to have attempted intrusions at 36 locations with 300 to 400 drones, which preliminary reports suggested were Turkish-made. An independent post-conflict assessment found that legacy air-defense guns, upgraded with new sights and air-burst ammunition, proved cost-effective against small drones. It also flagged a deeper institutional lesson: “Emergency procurements have become the preferred route as the regular procurement process remains cumbersome.” The sixth emergency tranche, sanctioned days after the fighting ended, allowed purchases of up to about ₹40,000 crore, with each contract capped at ₹300 crore.
The orders that followed were real but fragmented. In June 2025, alongside emergency contracts for counter-drone systems, orders were reported for about 450 Nagastra-1R loitering munitions for ₹158 crore and hybrid mini-drones from ideaForge for ₹137 crore. The pipeline has since grown. In June 2026, defense sources described a planned fast-track purchase of military drones worth more than ₹20,000 crore from domestic makers, with deliveries in 18 to 24 months. Around ten Indian firms, including Hindustan Aeronautics, Tata Advanced Systems, Larsen & Toubro, Solar Defence and Raphe mPhibr, bid for a project worth over ₹30,000 crore to supply 87 medium-altitude, long-endurance drones to the Air Force. For now, the high end is still imported. The October 2024 agreement for 31 MQ-9B drones worth $3.5 billion was a government-to-government purchase, with depot-level maintenance to be carried out in India.
Company accounts tell the story. ideaForge's revenue fell by about half in 2024-25. Its chief executive blamed a slowdown in government procurement, and in the final quarter of that year defense contracts made up just 4 per cent of revenue. The following year revenue recovered to ₹226 crore, with defense contributing 69 per cent, before the steep sequential fall of the latest quarter. Zen Technologies, a leading counter-drone supplier, reported that its consolidated revenue fell 29.4 per cent in 2025-26 to ₹687.7 crore. Its management said the timing of order inflows was responsible, and its chairman explained that some regular orders were delayed while emergency counter-drone purchases took priority. Analysts pointed to slower-than-expected order conversions. Both companies report healthier order books, but the pattern is one of spikes and troughs. An export industry needs the opposite: lines running steadily enough to push unit costs down and fund products designed for foreign buyers.
The comparisons of scale are sobering. Ukraine's defence minister said the country's armed forces would receive 3 million FPV drones in 2025, most of them made domestically. India's record loitering-munition contract works out to an average of nearly ₹1.9 crore per munition once launchers and accessories are included. That reflects a deliberate preference for long-range precision over mass, which may suit India's needs, but it means Indian firms are not gaining the volume experience that sets costs in the cheap-drone segment. In the premium segment, Türkiye's Baykar exported $2.2 billion worth in 2025, 88 per cent of its revenue, and has export contracts with 37 countries. That one company's exports came to roughly half the value of India's entire defense exports in 2025-26. A dataset of transfers from 2018 to 2023 found that Türkiye made 65 per cent of armed-drone sales among the three leading suppliers, China 26 per cent and the United States 8 per cent. Its authors credited Türkiye's rise to battlefield publicity and short delivery times.
Supporters of the drone push point to headline export numbers, which are genuinely impressive. Defense exports reached a record ₹38,424 crore in 2025-26, up 62.66 per cent, and went to more than 80 countries. Most of the increase, however, came from public-sector firms, whose exports rose 151 per cent, while private-sector exports rose 14 per cent. The ministry's release does not break the total down by product. Reporting on the figures indicates that public-sector exports are mainly munitions, fuses and lightweight torpedoes, and that the United States is the largest destination because American companies buy subsystems such as fuselages. Unmanned aircraft appear only in a list of items private firms export. The boom is real, but the headline says little about drones. Independent data point the same way. India was the world's second-largest importer of major arms in 2021–25 and does not appear among the 25 largest exporters. Those figures cover only major weapons and so likely undercount India's component-heavy trade, but they give no sign of a drone export breakthrough.
A prized market has also narrowed for firms selling themselves as trusted, non-Chinese suppliers. On December 22, 2025, the US Federal Communications Commission added drones and critical drone components produced in any foreign country to its Covered List, barring new models from authorisation. The components include flight controllers, motors, batteries, sensors and communications systems, and the commission states that the nationality of the producer is not relevant. Exemptions exist for products on the Pentagon's cleared list, but only temporarily, and case-by-case approvals require plans to move manufacturing to the United States. Sales to federal agencies are not affected. Being non-Chinese, in other words, does not open the American commercial market; access is more likely to come through defense customers, partnerships and local production. ideaForge's first order from the United States, received in early 2026, is an encouraging start, but it is only a start.
Three counterarguments deserve a fair hearing. The first is that export licensing, often blamed for holding back Indian arms sales, is no longer the obstacle, and on current evidence that is largely right. Since June 2023, a general authorisation has covered drones with a range of up to 25 kilometres and payloads of up to 25 kilograms, although it excludes military applications. Military items need authorisation from the Department of Defence Production (DDP), which says it ordinarily decides applications within two to four weeks, and the ministry says it has streamlined the process further. The constraints are elsewhere: price, the reputation that comes from proven performance, and financing.
The second counterargument is that Türkiye shows the model works: domestic demand plus combat validation produces exporters, and Operation Sindoor has supplied the validation. The comparison is instructive but incomplete. Baykar says it has funded its programmes from its own resources since 2003. Its export breakthrough came after repeated showings across several wars, and it offered short delivery times. India's combat record is real but rests on a single short conflict, and the government's own account of the industry behind it lists the SkyStriker, which Alpha Design builds with Israel's Elbit Systems. Combat use helps sell weapons; two decades of product maturity matters more.
The third argument is that India should relax its hostility to Chinese parts in order to compete on price. The cost penalty is real, and officials have acknowledged it. But dropping the one feature that sets Indian products apart, in a market where both India's own army and Washington are moving towards verifiable supply chains, would trade a lasting advantage for a temporary one.
That leaves components as the decisive question, and here official language has shifted. The principal scientific adviser said in January 2026 that a planned Drone Shakti Mission would “offer incentives to manufacture components used in drones, instead of assembling drones using imported components.” Rajnath Singh put it more starkly: “From the drone’s molds to its software, engines, and batteries, everything must be manufactured in India.” The money has not yet caught up with the language. The proposed mission would provide ₹1,600–1,800 crore over five years, subject to Finance Ministry and Cabinet approval. A separately reported PLI 2.0 proposal, still awaiting Cabinet approval as of April 2026, would aim to raise localisation only to about 30 per cent of total drone value. Motors show why progress will be slow. An industry adviser said in July 2025 that India had no domestic source of drone-grade rare-earth magnets, and ideaForge's chief executive observed that “hardware quality takes 1.5–2.0 years to build.” The government's ₹7,280 crore magnet scheme opened technical bids only on August 13, 2026, and it allows a two-year gestation period after contracts are awarded. On that timetable, Indian-made magnets are unlikely to reach drone assembly lines in volume before 2028.
The structure of the industry matters as well. The defense innovation programme iDEX has signed 548 contracts since 2018, yet only 45 procurement contracts worth about ₹2,326 crore. The large programmes are drawing bids mainly from big conglomerates and public-sector firms. A smaller drone maker warned that if only the larger players benefit from new incentives, no real ecosystem will develop. Some consolidation is healthy, but export competitiveness depends on a broad base of specialist suppliers of motors, radios, sensors and batteries, which prime contracts alone do not create.
The most plausible near-term export opening may be counter-drone systems rather than drones themselves. The mass drone raids along the western border in May 2025 made the need obvious, and Zen has disclosed costs incurred on an export order delivered in 2025-26. Its claim to rank among the world's best is unverified, but this is a segment where combat experience, affordability and a non-Chinese supply chain all work in India's favour.
What would change the picture? The draft Defence Acquisition Procedure 2026, released for comment in February, proposes separate procedures for faster buying of equipment with short technology cycles. The test is whether these turn emergency buying into multi-year framework contracts with published volumes that firms can plan and borrow against. An independent authority to verify indigenous content would give buyers at home and abroad confidence in the "Made in India" label. Component incentives would need to be approved and sized for the task: the first PLI scheme paid out less than ₹100 crore, while the defence pipeline now runs to tens of thousands of crores. Aligning test standards with partner certification regimes, and offering credible export financing, would help firms reach the markets that remain open.
The likeliest near-term outcome is that domestic orders keep growing and a handful of Indian firms win export contracts in counter-drone systems, small military drones and subsystems. What remains possible, but far from assured, is a Türkiye-style export champion by the end of the decade. That outcome depends less on the size of the next procurement announcement than on whether India builds the components, and the predictability, that the first wave of policy left out. The past year's orders have shown that India's armed forces want drones. Whether foreign militaries will want Indian ones is still an open question.
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