<\/p>\n
A key vulnerability lies in the reliance on rare earth magnets\u2014essential for high-performance drone motors, which India currently lacks the capacity to produce at scale, industry executives said. With China tightening export controls on these magnets, especially for defence applications, industry executives warn this could become a bottleneck in India\u2019s goal of building a fully self-reliant drone manufacturing ecosystem.<\/p>\n
The motors used in drones are made from rare-earth magnets, typically smaller brushless DC motors. \u201cThere are ongoing efforts to identify alternative options\u2014both in terms of materials and designs\u2014and to determine what can be used in place of Chinese-sourced rare earth magnets,” said Sai Pattabiram, founder and MD of Zuppa, a drone-tech startup. Garuda Aerospace invested in the company this year, and it is also backed by MapmyIndia.<\/p>\n
\u201cThe drone industry hasn\u2019t been drastically impacted yet, but the repercussions are likely to surface soon. That said, solutions will be pursued,” he added. Zuppa says that 80% of their drones are indigenously developed.<\/p>\n
Currently, India is home to 515 drone-related companies, with 263 focused specifically on component manufacturing. In terms of funding, drone startups secured $108 million in 2024 and have already raised $39 million in 2025, according to Tracxn data. India is also set to roll out a $234 million incentive scheme aimed at boosting domestic production of drones for both civil and defence use, according to aReuters<\/i>report. Moreover, the production-linked incentive (PLI) scheme, along with initiatives like the defence ministry\u2019s iDEX and Technology Development Fund (TDF), has created a fertile ground for companies to invest in R&D and ramp up manufacturing.<\/strong><\/p>\n Drone companies interviewed by Mint <\/i>echoed the sentiment that these schemes are not merely financial boosts, but strategic signals that India is committed to building a globally competitive drone ecosystem.<\/p>\n \n Key Takeaways\n <\/p>\n Yet, India\u2019s reliance on foreign suppliers\u2014particularly for magnets\u2014has emerged as a serious issue.<\/p>\n \u201cIn India, most motors used in drones are permanent magnet motors, which rely on rare earth magnets. Unfortunately, there are currently no alternative suppliers for these magnets,” said Srihari Mulgund, partner and New-Age Mobility leader, EY-Parthenon.<\/p>\n \u201cThere is currently no domestic source for drone-grade magnets in India. We need to start figuring this out, especially given the current situation,” he said. With defence applications flagged by foreign suppliers, access to these critical parts becomes even harder. \u201cIf the end use is defence-related, then suppliers\u2014especially from China\u2014won\u2019t ship the parts. That\u2019s a serious roadblock. You\u2019re essentially stuck if the supplier flags your application as defence,” Mulgund added.<\/p>\n In June, China issued six-month export licenses for select rare-earth materials following trade talks with the US, but continued to block exports of magnets intended for defence use, maintaining restrictions on military-grade components. \u201cEven automotive companies are struggling to secure these magnets\u2014so how can drone companies expect to fare better?” Mulgund said.<\/p>\n Currently, there is no viable recycling mechanism, and substituting with ferrite magnets or soft magnetic composites is not feasible, he added. These alternatives do not offer the same performance characteristics\u2014such as magnetic strength, weight efficiency, or thermal stability\u2014required for high-end drone applications.<\/p>\n Moreover, manufacturers don\u2019t stock large inventories. \u201cDemand is relatively low, as drones aren\u2019t high-volume products; much of the production is order-driven. Companies typically receive an order first and then procure parts, operating largely on a just-in-time basis,” Mulgund said.<\/p>\n Substitutes like ferrite magnets and soft magnetic composites exist but offer significantly lower magnetic strength, making them unsuitable for drones that require compact, high-efficiency components, according to Mulgund.<\/p>\n Yet investor appetite is evolving. As localisation deepens and strategic relevance grows, long-term capital is beginning to flow in.<\/p>\n Recently, Raphe mPhibr raised $100 million, the largest fundraising effort in India’s drone sector to date. However, CEO Vivek Mishra clarified that the funding isn’t for a single product but will go toward expanding both R&D and manufacturing capacities\u2014it is not tied to a specific product like drones.<\/p>\n The startup started in 2017 with a modest 2,000-square-foot research space. Later, it scaled up to a 100,000 sq ft integrated research and manufacturing facility, which has now expanded to a 650,000 sq ft facility.<\/p>\n The company serves over 10 Indian government clients, including the Army, Navy, Air Force, and armed police forces. Mishra said that the company has sold over 400 drones in the past 12 months alone.<\/p>\n On the rare earth magnet front, Mishra said the company has been actively working with authorities and advocating for indigenous manufacturing. \u201cThings have been moving, but they\u2019ve picked up pace over the last couple of months. We are now setting up local manufacturing for these magnets as well. For a few months, there might be certain problems\u2014but it\u2019s solvable,” he toldMint<\/i>.<\/p>\n \u201cThere\u2019s growing investment in drone manufacturing in India, but there\u2019s no magic bullet\u2014you can\u2019t just pump in money and expect startups to suddenly make everything indigenous,” said Pushkar Singh, co-founder of investment firm Tremis Capital. \u201cThe government is now focusing on manufacturing simpler, less complex components locally, as making high-precision components requires machining expertise we currently lack.”<\/p>\n Less complex components\u2014such as frames, casings, or basic assemblies\u2014are easier and quicker to manufacture compared to high-precision components, which demand advanced machining skills, tighter tolerances, and specialised equipment India is still developing.<\/p>\n He added that while Indian startups are unlikely to make missiles or tanks, drones represent a strategic sweet spot, especially with rising demand in modern warfare. \u201cModern warfare is shifting towards drones. The government wants to reduce dependency and boost exports. Many smaller countries can\u2019t afford fighter jets or missiles, but they can afford drones. That creates massive export potential for Indian startups.”<\/p>\n Mumbai-based IdeaForge says it has already built a fully proprietary autopilot stack\u2014meaning all flight control software and systems have been developed in-house, without using any third-party or open-source code. \u201cWe have written the software for our autopilot from the ground up. The PCB (printed circuit board), which connects and powers key electronic components, is also our own design\u2014and we ensure that microcontrollers (chips that control drone functions), don\u2019t come from geographies of concern (countries that may pose security or trade risks),” said Ankit Mehta, co-founder of IdeaForge. He added that, depending on the product, their drones are around 70% indigenously built.<\/p>\n On rare earths, Mehta said, \u201cIt\u2019s not a bottleneck yet\u2014the volume drones need is small. But the supply chain is about to get tested.” While software development timelines can be compressed, \u201chardware quality takes 1.5\u20132.0 years to build,” he added.<\/p>\n US, Europe, Japan, Australia, and India have already begun allocating significant resources to rebuild rare-earth supply chains and reduce their dependence on China. Australia\u2019s Lynas Rare Earths has ramped up production, while the US has designated rare earths as critical minerals and is channelling funding into domestic mining and refining. Globally, countries are also investing in recycling technologies to recover rare earths from electronic waste and advancing R&D to develop magnet alternatives and reduce overall rare-earth usage in high-tech applications.<\/p>\n <\/div>\n","protected":false},"excerpt":{"rendered":" A key vulnerability lies in the reliance on rare earth magnets\u2014essential for high-performance drone motors, which India currently lacks the capacity to produce at scale, industry executives said. With China tightening export controls on these magnets, especially for defence applications, industry executives warn this could become a bottleneck in India\u2019s goal of building a fully […]<\/p>\n","protected":false},"author":2,"featured_media":397792,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[188,183,185,186,38433,38430,38432,289,7184,187,184,38431,189,150,182,190],"class_list":["post-397790","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology","tag-blockchain-tech","tag-blockchain-technology","tag-crypto-technology","tag-cryptocurrency-technology","tag-defence-applications","tag-drone-ecosystem","tag-drone-manufacturing","tag-india","tag-local-manufacturing","tag-metaverse-technology","tag-nft-technology","tag-rare-earth-magnets","tag-soul-bound-token","tag-tech","tag-technology","tag-token-technology"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/397790","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=397790"}],"version-history":[{"count":1,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/397790\/revisions"}],"predecessor-version":[{"id":397793,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/397790\/revisions\/397793"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/397792"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=397790"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=397790"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=397790"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
Rare-earth alternatives<\/strong><\/h2>\n
Defence capabilities<\/strong><\/h2>\n