In today’s Finshots, we take a look at India’s evolving counter-drone ecosystem and what it means for the defence industry.

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The Story

In 2021, drones slipped into Indian airspace and dropped two explosives near the Indian Air Force base in Jammu. There were no casualties or dramatic visuals, but some damage. So it was, in the eyes of most people, just another border skirmish. But for India’s security establishment, it was a full-blown alarm bell.

Because it was the first time drones had been used to breach a military base on Indian soil. And more importantly, it marked the arrival of a new kind of threat that didn’t look like a warplane or missile, but could still wreak havoc with terrifying consequences.

Since then, the world of drones has changed dramatically. Take the recent Ukraine drone attack on Russia, for instance. Drones were hidden in trucks and secret containers after a year-long orchestrated plan. Once the trucks reached near Russian airbases, Ukrainian operatives opened the containers with drones from miles away and launched them at multiple locations at once which made the interception difficult. Each drone had specific targets locked into its system. And just like that about 40 Russian military aircrafts were either damaged or destroyed in a single day.

This changes the calculus of war. Unlike missiles or fighter jets, drones are dirt cheap. You can build one for a few lakhs. But the cost of the damage? Often hundreds of crores. So the attacker almost always has the upper hand.

Now, under the hood, drones are deceptively simple. They’re made of sensors, processors, motors, batteries and a controller. But the real power lies in its software. AI-based vision systems let drones identify targets. Real-time video streaming allows operators to fly them from bunkers miles away. And most of these parts are dual-use. Meaning they’re used in agriculture, logistics, surveying. Which is exactly what makes them so hard to regulate. You’re not just stopping a weapon but potentially choking an entire industry.

And here’s the thing. India was late to the drone or unmanned aerial vehicles (UAV) party. For decades, we relied on Israeli Heron and Searcher drones. Our indigenous projects, like DRDO’s Nishant and TAPAS, were either delayed or shelved. In fact, India accounted for the largest share (about 22%) of the world's UAV imports between 1985 and 2014.

But the Jammu incident changed the equation. It forced India to speed up something it had long neglected: credible defences against these drones as well as the “counter-drone” market.

What are these counter drones? Well, they aren’t a single piece of tech. There’s radar to detect low-flying objects. Radio frequency (RF) scanners to intercept command signals. Jammers to scramble navigation. Electro-optical sensors to track movement. And lasers or micro missiles to take drones down, if needed. All of it, stitched together into a single system that can react in seconds. And building this is hard. Because drones don’t fly like planes. They’re small and many don’t even rely on GPS anymore. So conventional defences fall short and you need entirely new architecture.

But in 2021, the DRDO and Bharat Electronics rolled out the D4 system. It was a locally developed counter-drone solution capable of both “soft kill” (one that jams the drone signals) and “hard kill” (one that shoots the drones down using laser-based destruction). The Indian Air Force (IAF) placed a massive ₹155 crores anti drone system contract with Zen Technologies.

Sidebar: D4 is one of the systems that was recently used in Operation Sindoor to neutralise swarms of Turkish drones launched by Pakistan.

And more systems followed.

Grene Robotics developed Indrajaal, an AI-powered drone dome that can autonomously detect and neutralise threats across 4,000 sq km. Solar Industries built Bhargavastra, a portable missile system for targeting swarms. Zen Technologies began shipping integrated detection and jamming suites. Even Axiscades stepped in with India’s first man-portable drone jammer. And HFCL, once a telecom infra company, began developing radar systems for drone detection, and bagged a deal to supply parts to America’s biggest drone maker.

In short, what started as a defence emergency quickly snowballed into an industry. And it has also turned the Indian defence sector from a buyer to a builder, and, slowly, an exporter of counter drone systems. For instance, Taiwan is currently seeking to purchase India’s D4 anti-drone.

Because India is not just catching up. It’s ahead, at least where it matters. You see, Western systems like Israel’s Drone Dome or the US’s Raytheon Coyote are powerful but expensive. A single unit can cost upwards of ₹80 lakhs to crores in basic setups. Indian systems, meanwhile, are functional, modular and way cheaper in costs. So for many countries, India suddenly looks like a viable defence partner.

In FY25, India’s defence exports touched an all-time high of ₹23,600 crore. That’s a 34x jump compared to just ₹686 crore in FY14. And while anti-drone systems aren’t yet a massive line item here, they’re becoming part of the mix.

The global counter-drone market itself is projected to reach $12 billion by 2032. If India can capture even a slice of that, it could translate into thousands of crores in new revenue for Indian defence firms.

Zen Technologies already has over half of its order book tied to counter drone systems, and the management sees this market as a key area for growth, both domestically and internationally. Axiscades has delivered over 100 counter drone systems and expects repeat orders. As the company’s management puts it… ‘The counter-drone is the most wanted system across the defense now. And then we are leading this entire program to supply of these counter-drone systems to the Indian defense.’ Even startups are prototyping swarming systems and kamikaze drones (which are designed to attack targets by crashing into them).

But let’s not get carried away just yet.

Because while India’s progress has been rapid, it’s still uneven.

Why?

Most of the sensors, chips, and thermal imaging modules needed to power these systems are still imported. Components like semiconductors, thermal imaging modules, advanced batteries. And our systems work, yes, but scaling them across every border, every airbase, every civilian zone is a logistical and financial challenge. And at the tactical level, anti-drone systems can still struggle with swarms or weather-based interference.

There’s also a brutal asymmetry baked into this race. Drones will keep getting cheaper and smarter. Defending against them will always cost more. One side gets to experiment with toy-grade hardware. The other needs million-dollar shields. And that’s not a sustainable equation unless you rethink the very economics of defence.

That’s why India’s next move will be critical. It won’t be just to build more but to build smarter drones and counter-drone systems.

It’ll mean ramping up domestic manufacturing of critical components. Making systems adaptable. Investing in AI-led automation for faster targeting. Creating export-friendly packages with maintenance and training built in. And most importantly, being agile enough to stay ahead of other nations investing heavily in this space. Because drone tech is evolving faster than most defence procurement systems can react.

The good news? We’ve already done the hard part: we’ve stopped waiting for others and are moving away from imports of drone components. The armed forces are now betting on homegrown solutions and companies are doubling down on R&D.

Defence tech is never static. It evolves, adapts and often leapfrogs. It punishes complacency. So the real challenge isn’t building something once but staying ahead of the next move. Whether we lead the anti-drone wave, or merely stay relevant, will depend entirely on what we do next.

Until then…

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