When Nazi Germany launched its V-1 flying bombs in 1944 across the English Channel toward Britain, it represented a fundamental challenge to prevailing war economics. Inexpensive, unmanned and crude, these “buzz bombs” were technologically inferior to the fighter planes that dominated the skies during World War II.
But what they did was make Britain spend more on intercepting incoming missiles than the Germans spent on producing them.
Eighty-two years later, relatively cheaper unmanned systems are once again rewriting the economics of war. Whether in Ukraine, the Red Sea, or West Asia, drones costing a few thousand dollars increasingly threaten military assets worth millions. In many cases, countries deploy expensive air defense systems to neutralize these low-cost attacks.
It is no longer a debate whether or not drones can complement fighter aircraft. The bigger question is economic: How should India allocate its limited defense resources at a juncture where cheap, unmanned technologies pose a challenge to the business of war itself?
India’s geographic location, alongside two nuclear-armed neighbors, puts it in a formidable position. In the face of China’s industrial capacity, spending a similar amount of military spending may not be the best option. “India has a border dispute with two adversaries who have strong air forces, and combat air power is part of their military strategy. They will deploy their air force against us,” says Air Marshal Diptendu Chaudhary (retd), an air power researcher.
Drones or planes?
The challenge for India is to get maximum military advantage for every rupee it spends, without overcommitting to platforms that may become too expensive to sustain in highly contested conflicts.
“Drone technology and software algorithms will need to undergo rigorous testing to reach this maturity of robust, consistent decision-making.”
-Depesh Gupta,Managing Director of Vida Aviation
Long-range vectors and drones preserve their most valuable and irreplaceable asset, the trained pilot. “Recent (global) conflicts have shown that ground-launched systems can achieve kill rates against aircraft, making conventional air operations near the front line prohibitively expensive,” says former IAF Deputy Chief Air Marshal Anil Khosla (retd). The capabilities of combat aircraft, even today, exceed those of drones. Furthermore, having a human in the loop is crucial for some combat decisions. “Drone technology and software algorithms will need to undergo rigorous testing to reach the maturity of robust and consistent decision-making,” says Dipesh Gupta, Managing Director, VEDA Aeronautics.
VEDA Aeronautics has been contracted to supply the Smart Unmanned Munitions System to the Indian Air Force (IAF). The Noida-based startup is also developing Air Dropped Canisterised Swarm drones for the Indian Air Force, allowing transport aircraft such as the Boeing C-17 Globemaster III, Lockheed Martin C-130J Super Hercules and Airbus C295 to fly long-range attack missions.
The debate over the effectiveness of drones over fighter jets comes at a time when the IAF has received a necessary nod from the government to purchase 114 Rafale fighter jets at an estimated cost of £3.25 trillion (about $36 billion). Homegrown aircraft manufacturer, Hindustan Aeronautics Ltd (HAL), has been contracted by the Indian Air Force to deliver 83 indigenously built LCA MK1A light combat aircraft. The delivery schedule has been postponed because GE Aerospace has not yet delivered the aero engines for these fighter jets. In September 2025, the IAF ordered 97 more LCA MK1A aircraft in the second batch.
Gupta is optimistic that the development of combat aircraft technologies in UAVs can be achieved through ongoing research and development efforts. It is believed that until then, drones could serve as a force multiplier for combat aircraft.
The strongest argument in favor of manned aircraft is their reusability. A cruise missile or kamikaze drone can only be used once and in only one turn. On the other hand, a fighter jet can carry out multiple missions and can change its role by changing its weapons package. Experts believe that one needs to take into account the entire operational life of the aircraft and compare the cost of each strike of a modern multi-role fighter with a stand-off missile or a suicide drone.
The Indian military drone market size will reach $597.88 million in 2025, according to an IMARC Group report. The market is expected to reach $1.9 billion by 2034 with a growth rate of 13.82%.
Taking on the neighbors
Both China and Pakistan are investing heavily in combat aircraft and unmanned aerial assets. The Pakistan Air Force (PAF), besides accelerating the production of the Chinese-made J-35 (FC-31) “Gyrfalcon” fifth generation fighter jet, has procured cost-effective drones from China and Turkey.
China builds new fighter jet designs every 10 years, and can advance sixth-generation fighter jets before the United States. Meanwhile, China’s unified military organization, the People’s Liberation Army, which serves as the country’s main armed forces, is focusing on developing the ability to link long-range drones to its intelligence, surveillance and reconnaissance platform to strike enemy targets. According to estimates, China can produce 500,000 FPV (first person view) drones per month and increase production to 700,000 during wartime.
A cost-per-unit comparison can make competition skewed against fighter jets, drones, and cruise missiles seem like an obvious choice. But experts warn against such a simplistic analysis. “Cost-benefit analysis in war is not just a matter of unit cost,” says Air Marshal Khosla. “It is the impact achieved for every dollar spent (Bang for Buck). It is measured across the entire mission profile, including survivability, reusability, resilience and escalation management.”
Maximizing deterrence in the face of dollars spent is the biggest challenge facing the Indian Armed Forces now. It is difficult for India to match China and Pakistan on every platform. The paradox facing defense planners trying to build sustainable deterrence is not only military but also economic.
Deterrence, in simple language, is asking another country to refrain from doing something. To achieve this end, India must work to make its national strategic policy capable of communicating its goals vis-à-vis its adversaries in an unambiguous manner.
India needs to build its military strength through traditional capabilities such as stealth fighter aircraft and air defense systems, with less expensive force multipliers such as drones, cyber capabilities, and artificial intelligence-enabled systems.
The National Strategic Policy will also help Indian domestic industry to focus on its stated military objectives rather than making emergency purchases during crises. Self-reliance in defense is a good start. The Indian defense players will need a significant amount of support from the Indian government to help them transform into a major global player like China’s Norinco, South Korea’s Aerospace, and Turkey’s Turkish Aerospace Industries, to achieve a degree of self-reliance.
India is hedging its bets to make its military battle ready for future war. Air Marshal Chaudhry sees manned and unmanned systems working side by side. “When the risk is high for manned platforms, it will be offset by missiles and drones. It will be a hybrid strategy (in the future). Statements like ‘the communications war is over’ are over-zealous comments made without proper thought.”
However, in the absence of indigenous manufacturing capacity for long-endurance, high-altitude UAVs, India was forced to purchase 31 MQ-9B SkyGuardians/SeaGuardians under a $3.9 billion deal with the United States. With HAL already tied up with LCA production – and facing delays due to late deliveries of aircraft engines from GE Aerospace – the Indian government is looking for private players for the fifth-generation Advanced Medium Combat Aircraft (AMCA) programme, which is estimated to cost around $1.58 billion. Among those involved in the battle are Tata Advanced Systems Ltd, a consortium led by Bharat Forge Ltd, and another led by Larsen & Toubro.
Drone manufacturing in India
Ukraine has made drones a weapon on the battlefield, but after losing about 10,000 drones a month, it has expanded its drone capacity with outside help. The military drone industry in India is just getting started. The Indian Army’s shift towards more automation and unmanned systems was prompted by Operation Sindoor against Pakistan in 2025.
India has a large industrial base for civilian drones, but only three to five manufacturers have the capacity to produce military-grade drones. At present, 80% of the drones manufactured in India are intelligence, surveillance and reconnaissance drones, 15% are attack drones, and the remaining 5% are logistics drones.
“Not all components must be manufactured in India from day one, but critical systems must be auditable, safe, replaceable, and free of foreign dependencies.”
-Sergeant Shah,Managing Director of SHIELD AI
Sarjan Shah, managing director of Shield AI, sees the drone team as the future of the Air Force. In 2024, Shield AI, an American drone manufacturer, joined hands with JSW Defense to manufacture V-BAT drones in India. It is investing $90 million to set up a production facility in Hyderabad. The company offers autonomous vertical take-off and landing aircraft, eliminating dependence on long, fixed runways, ensuring survivability on the modern battlefield.
Another challenge facing the Indian drone industry is supply chain gaps. The recent conflict in West Asia has delayed shipments of Israeli-made drone components. Thermal cameras and infrared optics rely on germanium lenses, a semiconductor material controlled by China. Recently, Hyderabad-based startup Aeon Spacelabs developed the country’s first germanium-free lens, the Lumira E40I50, for ISR missions. “Not every component must be manufactured in India from day one, but every critical system must be auditable, secure, replaceable, and free of obscure foreign dependencies,” says Shah.
For India, maximizing deterrence with limited defense capital may not lie in choosing between fighter jets and drones, but in investing in a combination that offers the greatest strategic return per rupee.
