According to four defense and industry officials and documents analyzed by Reuters, India recently forbade domestic producers of military drones from utilizing components made in China due to worries about security flaws.

This move coincides with New Delhi’s pursuit of military modernization, which calls for increased usage of unmanned quadcopters, long-endurance systems, and other autonomous platforms, as well as tensions between the nuclear-armed neighbors.

However, the defence and industry figures said India’s security leaders were concerned that intelligence-gathering could be compromised by Chinese-made parts in drones’ communication functions, cameras, radio transmission, and operating software as the young Indian industry tries to meet the military’s needs.

As they were not authorized to speak to the media or due to the sensitivity of the subject, three of these individuals and several of the six more government and business leaders that Reuters spoke to requested anonymity. Inquiries from Reuters went unanswered by the Indian defense ministry.

According to documents, India’s strategy, which was originally reported by Reuters, is being put into effect through military tenders and complements the gradual import limitations on surveillance drones that have been in place since 2020.

According to minutes examined by Reuters, Indian military officials informed prospective bidders at two meetings in February and March to discuss drone contracts that equipment or subcomponents from “countries sharing land borders with India will not be acceptable for security reasons.” The military representatives were not named in the minutes.

One contract document demanded that providers identify the country of origin of their components because such subsystems allegedly contained “security loopholes” that exposed sensitive military data.

Despite worries about cyberattacks, a senior defense official told Reuters that China was being referred to when the phrase “neighboring countries” was used. He also noted that Indian industry had grown reliant on the world’s second-largest economy.

Beijing has refuted claims that it is a party to cyberattacks. Questions regarding India’s actions were not answered by China’s commerce ministry, which last week put export restrictions on select drones and drone-related equipment.

In 2019, the US Congress outlawed the Pentagon’s acquisition and use of drones and their Chinese-made parts.

In order to counter perceived threats, notably those from China, whose forces have recently engaged Indian soldiers along their disputed border, Prime Minister Narendra Modi has worked to strengthen India’s drone capabilities.

75% of the 1.6 trillion rupees ($19.77 billion) India has planned allocated for military modernization in 2023–2024 would go to domestic industries.

However, by requiring manufacturers to find components abroad, the embargo on Chinese parts has increased the cost of producing military drones locally, according to government and industry experts.

70% of the items in the supply chain, according to Sameer Joshi, founder of Bengaluru-based NewSpace Research and Technologies, a provider of small drones to the Indian military.

So, he continued, “If I talk to, say, a Polish guy, he still has his components that are coming from China.”

Joshi noted that switching to a non-Chinese pipeline caused costs to rise significantly. He said that some businesses continued to import materials from China but would “white-label it, and kind of keep the costs within that frame”.

India depends on foreign suppliers for both individual components and complete systems since it lacks the expertise to produce some types of drones.

According to Y. Dilip, director of the state-run Aeronautical Development Establishment (ADE), a government-funded initiative to create a domestic Medium Altitude Long Endurance unmanned system is at least half a decade behind schedule.

In order to achieve the military’s aim of a drone that can reach an operating altitude of 30,000 feet and remain in the air for 24 hours, the platform, known as Tapas, still requires modification, according to Dilip.

He claimed that the engines were our main source of restriction because neither those made in India nor the imported versions were up to the task.

Apart from Tapas, which is anticipated to start military trials this month, ADE is also developing a High Altitude Long Endurance platform and a stealth unmanned platform, both of which will take years to complete.

India stated in June that it would pay more than $3 billion for 31 MQ-9 drones from the United States to cover these gaps.

Drone specialist R.K. Narang of the government’s Manohar Parrikar Institute for Defence Studies and Analyses stated, “There has to be coherent national strategy to fill the technology gaps” to produce goods that are profitable.

In February, Finance Minister Nirmala Sitharaman promised that the private sector will receive one-fourth of this year’s 232.6 billion rupee ($2.83 billion) budget for defense research and development.

However, Narang claimed that the country’s major private corporations made scant investments in R&D. Joshi claimed that due to lengthy lead periods and the possibility that orders would not materialize, venture investors avoided investing in military enterprises.

India would need to endure greater prices in order to increase domestic manufacture, according to the senior defense official.

“The price will increase by 50% if I buy equipment from China today but declare that I want to manufacture it in India,” he remarked. “As a nation, we must be prepared to assist in this ecosystem’s development.”

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