When Russian Shahed drones started appearing over Ukrainian cities in 2022, most Western analysts focused on the wrong question. They asked how Iran had managed to produce drones sophisticated enough to matter in a European land war. The more important question was the one Iranian engineers didn’t have to ask: who do we call for permission to build these? The answer was nobody. Iran built them because it had to, sold them because it could, and in doing so demonstrated something that every serious military establishment absorbed immediately. Cheap, mass-produced drones have permanently changed the cost calculus of warfare, and the countries that can make them at scale have a strategic advantage that money alone cannot quickly replicate.
Every military in the world has updated its drone requirements upward since then. India is no exception. What makes India’s situation different — and genuinely interesting — is that unlike most countries scrambling to build drone capability from scratch, India already has the pieces in place. It has the startups, the policy framework, the domestic demand, and now the strategic urgency. What it has not yet demonstrated is the ability to convert all of that into industrial-scale production. That gap is the story.
The Demand Signal Is Not Subtle
India’s military requirement for drones is large, confirmed, and growing. The Indian Army’s Future Infantry Soldier As a System programme has drone integration at its core. The Indian Navy’s maritime surveillance requirements across the Indian Ocean, particularly given Chinese naval expansion, demand persistent aerial coverage that manned aircraft cannot economically provide. The LAC, stretching across some of the most inhospitable terrain on earth, is a surveillance and logistics problem that drones solve better than almost any alternative.
India's defence, delivered twice a week.
The numbers reflect this. India’s defence budget allocation for unmanned systems has grown consistently. iDEX has run multiple drone-specific challenges with over 75 drone-related problem statements issued to startups, covering tactical surveillance systems, swarm drones, and autonomous capabilities. The Ministry of Civil Aviation’s Drone Rules 2021 opened the sector to private players in ways the previous regulatory framework had actively prevented. The Production Linked Incentive scheme for drones allocated Rs 120 crore to build domestic manufacturing capacity, with PLI 2.0 now under consideration at over Rs 1,000 crore — a significant expansion that signals how seriously the government is taking the sector.
The demand is not speculative. It is budgeted, documented, and in several cases already tendered. The question is whether Indian industry can fulfill it. HAL and DRDO, despite their technical depth, were never structured for rapid iteration or mass production of small drones. Their development cycles remain long and their procurement processes slow. The private sector has to fill the gap.
What India Drone Industry Actually Has
The honest answer is more than most people outside the sector realise, and less than the sector’s most enthusiastic boosters claim.
India now hosts over 500 drone startups, with around 526 companies active in the sector as of early 2026. Several stand out for their technical depth and real-world achievements. ideaForge is the clearest proof of concept. Its SWITCH UAV has been inducted by the Indian Army, the paramilitary forces, and several state police organisations. It went public in 2023, making it the first listed pure-play drone company in India, and has won contracts worth over Rs 100 crore in 2025 alone, demonstrating a real path from startup to scaled supplier. Garuda Aerospace has built a large commercial fleet and pivoted aggressively toward defence applications, securing government partnerships and scaling production. Raphe mPhibr raised $100 million in 2025, one of the largest funding rounds for a defence startup in India, and supplies surveillance and logistics drones to the Army, Navy, Air Force, and paramilitary forces. Throttle Aerospace Systems has focused on fixed-wing surveillance drones with endurance profiles that matter for border monitoring.
These are not demo companies. They have inducted products, won government contracts, and in some cases exported. The ecosystem around them — component suppliers, software developers, payload integrators — is growing, if not yet deep enough for true industrial scale. The policy architecture, for once, is broadly supportive rather than actively obstructive. Several defence corridors have drone manufacturing clusters in development. The direction is right. The pace is the problem.
The Iran Lesson, Applied Here
The previous piece in this series made an argument about Iran that bears repeating in this context. Iran built a drone arsenal under sanctions, without foreign components, without foreign expertise, and without foreign permission. Those drones have now influenced the conduct of two wars on two continents. The capability Iran built out of necessity, India could build out of choice, with better resources, better talent, and a far larger addressable market.
The difference is that Iran had no alternative. Indian procurement still treats domestic drone companies as one option among several, to be evaluated against foreign suppliers on price and specification sheets, on timelines that assume the threat environment will politely wait for the process to conclude. That assumption has not aged well anywhere it has been tested.
India’s border with China adds a layer that makes the urgency concrete in a specific way. DJI, the Chinese company that dominates global commercial drone sales, holds an estimated 70 percent share of the consumer and commercial drone market. Several Indian security agencies have already issued advisories about DJI drones being used near sensitive areas. The import dependency on Chinese drone components — motors, flight controllers, batteries — runs deep into the supply chains of even nominally Indian drone companies. This is not a theoretical vulnerability. It is a live one, on a border that has seen active standoffs in recent years.
Where the Execution Breaks Down
The gap between what India’s drone sector can demonstrate and what it can deliver at scale is real and specific.
The procurement timeline problem has not been solved by iDEX. Winning an iDEX challenge and winning a production contract are separated by years of trials, certification, and field evaluation that companies with limited runways cannot always survive. Several genuinely capable drone startups have run out of money between prototype success and purchase order. The testing and certification infrastructure — ranges, evaluators, standardised protocols — is not keeping pace with the number of companies that need to move through it.
The component indigenisation problem is structural. India does not yet manufacture high-performance brushless motors, advanced flight controllers, or the battery cells that military drones require at anything approaching the volume and specification needed. Assembly in India with imported components is progress, but it is not the supply chain resilience that the strategic argument demands. A conflict scenario that disrupts Chinese component supply would ground a significant portion of India’s nominally domestic drone fleet.
The scale problem is the hardest. Ukraine is consuming drones at a rate that makes the entire output of India’s drone sector look like a rounding error. Industrial-scale drone production requires a fundamentally different manufacturing architecture than the custom and small-batch production most Indian companies currently operate. Making the transition requires capital, orders, and time — and the ordering patterns of Indian defence procurement do not currently provide the volume certainty that justifies the capital investment.
The Window Is Open, Not Permanent
Global drone demand is a multi-decade story, but the window for India to establish itself as a credible supplier is not infinite. Turkey has already done it with Bayraktar. Israel has done it with decades of investment and combat-proven systems. South Korea, the UAE, and several other countries are moving fast. The Global South market — countries that want capable drones and don’t want to buy Chinese or American for geopolitical reasons — is large, real, and currently underserved.
India’s path to that market runs through domestic induction. No serious buyer will purchase Indian military drones at scale until the Indian military has inducted them at scale. Domestic induction is the proof of capability that unlocks export credibility. The Atmanirbhar push in drones is one of the very few areas where government policy, private sector capability, strategic urgency, and genuine global market opportunity are all aligned simultaneously. Those alignments are rare and they don’t last.
The ore is in the ground. The equipment exists. The miners know what they’re doing. What the goldmine needs now is someone to decide that extraction is actually the priority, and to organise the operation accordingly. India’s drone sector does not need more policy statements. It needs purchase orders, testing infrastructure, and procurement timelines that treat a strategic window like one.