A key vulnerability lies within the reliance on uncommon earth magnets—important for high-performance drone motors, which India presently lacks the capability to provide at scale, trade executives mentioned. With China tightening export controls on these magnets, particularly for defence functions, trade executives warn this might turn into a bottleneck in India’s aim of constructing a totally self-reliant drone manufacturing ecosystem.
The motors utilized in drones are produced from rare-earth magnets, usually smaller brushless DC motors. “There are ongoing efforts to establish different choices—each when it comes to supplies and designs—and to find out what can be utilized rather than Chinese language-sourced uncommon earth magnets,” mentioned Sai Pattabiram, founder and MD of Zuppa, a drone-tech startup. Garuda Aerospace invested within the firm this 12 months, and it’s also backed by MapmyIndia.
“The drone trade hasn’t been drastically impacted but, however the repercussions are more likely to floor quickly. That mentioned, options might be pursued,” he added. Zuppa says that 80% of their drones are indigenously developed.
Authorities assist
At the moment, India is residence to 515 drone-related corporations, with 263 centered particularly on element manufacturing. By way of funding, drone startups secured $108 million in 2024 and have already raised $39 million in 2025, based on Tracxn knowledge. India can be set to roll out a $234 million incentive scheme geared toward boosting home manufacturing of drones for each civil and defence use, based on aReutersreport. Furthermore, the production-linked incentive (PLI) scheme, together with initiatives just like the defence ministry’s iDEX and Expertise Improvement Fund (TDF), has created a fertile floor for corporations to put money into R&D and ramp up manufacturing.
Drone corporations interviewed by Mint echoed the sentiment that these schemes will not be merely monetary boosts, however strategic alerts that India is dedicated to constructing a globally aggressive drone ecosystem.
Key Takeaways
- There are over 515 corporations, and over $108 million in funding in 2024, with rising authorities assist.
- Reliance on foreign-made sensors, controllers, and particularly motors powered by uncommon earth magnets.
- Lack of home magnet manufacturing and China’s export restrictions threaten trade scalability, particularly for defence.
- Corporations like Raphe mPhibr are actively working to develop native magnet manufacturing, however progress is phased and technology-dependent.
- With trendy warfare shifting to drone know-how, India’s push for self-reliance and exports presents vital development alternatives, albeit with technological and provide chain challenges.
But, India’s reliance on overseas suppliers—significantly for magnets—has emerged as a severe problem.
“In India, most motors utilized in drones are everlasting magnet motors, which depend on uncommon earth magnets. Sadly, there are presently no different suppliers for these magnets,” mentioned Srihari Mulgund, companion and New-Age Mobility chief, EY-Parthenon.
“There may be presently no home supply for drone-grade magnets in India. We have to begin figuring this out, particularly given the present scenario,” he mentioned. With defence functions flagged by overseas suppliers, entry to those crucial elements turns into even more durable. “If the top use is defence-related, then suppliers—particularly from China—gained’t ship the elements. That’s a severe roadblock. You’re primarily caught if the provider flags your software as defence,” Mulgund added.
In June, China issued six-month export licenses for choose rare-earth supplies following commerce talks with the US, however continued to dam exports of magnets meant for defence use, sustaining restrictions on military-grade elements. “Even automotive corporations are struggling to safe these magnets—so how can drone corporations anticipate to fare higher?” Mulgund mentioned.
Uncommon-earth alternate options
At the moment, there is no such thing as a viable recycling mechanism, and substituting with ferrite magnets or smooth magnetic composites will not be possible, he added. These alternate options don’t provide the identical efficiency traits—resembling magnetic energy, weight effectivity, or thermal stability—required for high-end drone functions.
Furthermore, producers don’t inventory massive inventories. “Demand is comparatively low, as drones aren’t high-volume merchandise; a lot of the manufacturing is order-driven. Corporations usually obtain an order first after which procure elements, working largely on a just-in-time foundation,” Mulgund mentioned.
Substitutes like ferrite magnets and smooth magnetic composites exist however provide considerably decrease magnetic energy, making them unsuitable for drones that require compact, high-efficiency elements, based on Mulgund.
But investor urge for food is evolving. As localisation deepens and strategic relevance grows, long-term capital is starting to move in.
Just lately, Raphe mPhibr raised $100 million, the biggest fundraising effort in India’s drone sector thus far. Nevertheless, CEO Vivek Mishra clarified that the funding is not for a single product however will go towards increasing each R&D and manufacturing capacities—it’s not tied to a selected product like drones.
The startup began in 2017 with a modest 2,000-square-foot analysis area. Later, it scaled as much as a 100,000 sq ft built-in analysis and manufacturing facility, which has now expanded to a 650,000 sq ft facility.
The corporate serves over 10 Indian authorities shoppers, together with the Military, Navy, Air Pressure, and armed police forces. Mishra mentioned that the corporate has bought over 400 drones up to now 12 months alone.
On the uncommon earth magnet entrance, Mishra mentioned the corporate has been actively working with authorities and advocating for indigenous manufacturing. “Issues have been shifting, however they’ve picked up tempo over the past couple of months. We at the moment are organising native manufacturing for these magnets as effectively. For a couple of months, there may be sure issues—however it’s solvable,” he advisedMint.
Defence capabilities
“There’s rising funding in drone manufacturing in India, however there’s no magic bullet—you possibly can’t simply pump in cash and anticipate startups to abruptly make all the pieces indigenous,” mentioned Pushkar Singh, co-founder of funding agency Tremis Capital. “The federal government is now specializing in manufacturing easier, much less advanced elements regionally, as making high-precision elements requires machining experience we presently lack.”
Much less advanced elements—resembling frames, casings, or primary assemblies—are simpler and faster to fabricate in comparison with high-precision elements, which demand superior machining expertise, tighter tolerances, and specialised tools India remains to be creating.
He added that whereas Indian startups are unlikely to make missiles or tanks, drones characterize a strategic candy spot, particularly with rising demand in trendy warfare. “Fashionable warfare is shifting in the direction of drones. The federal government needs to cut back dependency and enhance exports. Many smaller nations can’t afford fighter jets or missiles, however they will afford drones. That creates large export potential for Indian startups.”
Mumbai-based IdeaForge says it has already constructed a totally proprietary autopilot stack—that means all flight management software program and techniques have been developed in-house, with out utilizing any third-party or open-source code. “We now have written the software program for our autopilot from the bottom up. The PCB (printed circuit board), which connects and powers key digital elements, can be our personal design—and we make sure that microcontrollers (chips that management drone features), don’t come from geographies of concern (nations that will pose safety or commerce dangers),” mentioned Ankit Mehta, co-founder of IdeaForge. He added that, relying on the product, their drones are round 70% indigenously constructed.
On uncommon earths, Mehta mentioned, “It’s not a bottleneck but—the quantity drones want is small. However the provide chain is about to get examined.” Whereas software program growth timelines may be compressed, “{hardware} high quality takes 1.5–2.0 years to construct,” he added.
US, Europe, Japan, Australia, and India have already begun allocating vital sources to rebuild rare-earth provide chains and cut back their dependence on China. Australia’s Lynas Uncommon Earths has ramped up manufacturing, whereas the US has designated uncommon earths as crucial minerals and is channelling funding into home mining and refining. Globally, nations are additionally investing in recycling applied sciences to get better uncommon earths from digital waste and advancing R&D to develop magnet alternate options and cut back general rare-earth utilization in high-tech functions.
