[color=hsl(0,0%,0%)]For the past two decades, Anadrone Systems has been at the forefront of India’s indigenous drone and defence technology ecosystem. From its modest beginnings in 2004 to becoming a trusted supplier to all three branches of the armed services, the company has evolved into one of the country’s leading drone manufacturers. In this conversation with BW Businessworld, Anant Bhalotia, Managing Director and CEO of Anadrone Systems, discusses the company’s journey, its partnerships with the armed forces, India’s standing in the global drone race, and the reforms needed to sustain the domestic drone industry. Excerpt:
[color=hsl(0,0%,0%)]It has been nearly 20 years since Anadrone Systems was founded in 2004. How would you describe your company’s performance and journey over these two decades?
[color=hsl(0,0%,0%)]We have come a long way since our humble beginnings in 2004. The company started in Mumbai, though our headquarters were later established in Odisha. In the early years, our focus was on security-related solutions for the armed forces, such as bulletproof protection and weather-resistant equipment.
[color=hsl(0,0%,0%)]Gradually, we ventured into the field of electronic warfare. We supplied a large number of electronic warfare simulators to premier Indian Army establishments. In 2010, we entered into a collaboration with a UK-based partner to start manufacturing in India, becoming one of the very first entrants into the Indian drone market. That collaboration marked the beginning of our offset operations in India.
[color=hsl(0,0%,0%)]From there, we consistently increased our local content, and today, around 70 per cent of our systems are indigenously designed and manufactured. Our goal is to achieve 100 per cent indigenisation in the near future.
[color=hsl(0,0%,0%)]In terms of financial growth, the company has scaled remarkably. We began with revenues of Rs 10–12 crore in the early years. Today, our turnover stands close to Rs 250 crore, and this year we expect to cross Rs 300 crore. The journey has been both exciting and challenging, but above all, it has been deeply encouraging for us as an Indian defence technology company.
[color=hsl(0,0%,0%)]You mentioned that around 70 per cent of your systems are made in India, while the rest are imported. Could you elaborate on what components are imported and from where?
[color=hsl(0,0%,0%)]Most of the imports are limited to certain specialised electronic components, and these largely come from European countries and the UK. That said, we maintain partnerships across the globe, including the US and Australia, depending on the nature of the component or technology.
[color=hsl(0,0%,0%)]The business models vary from supplier to supplier. For some products, we have direct purchase agreements; for others, we enter into technology transfer arrangements or long-term partnerships. It is not a one-size-fits-all approach; every collaboration is structured differently based on the product and the strategic requirement.
[color=hsl(0,0%,0%)]Could you elaborate on Anadrone’s partnerships with the Indian armed forces?
[color=hsl(0,0%,0%)]The Indian armed forces are our primary customers. We have supplied drones and systems to the Army, Navy and Air Force, in addition to DRDO, Defence PSUs, and some weapon manufacturers. Over the last 15 years, we have delivered more than 1,000 drones to the services.
[color=hsl(0,0%,0%)]We also hold a rate contract with DRDO for providing aerial target support services. These include support for missile testing, gun firing trials, and operational exercises, whether in deserts, coastal areas, high-altitude locations, or even onboard naval ships. In short, our systems are deployed across a wide range of operational environments, and our partnership with the armed forces is central to everything we do.
[color=hsl(0,0%,0%)]Which among the three services – Army, Navy, or Air Force – would you say is your biggest client?
[color=hsl(0,0%,0%)]All three services are important to us and are procured from us regularly. If I were to point out a trend, I would say that the Navy and Air Force procure more consistently. But it would not be accurate to highlight one as the biggest client because our relationship with all three is strong and ongoing.
[color=hsl(0,0%,0%)]We have seen drones being widely used in recent conflicts, and there have been reports of Pakistan procuring drones from Turkey and China. How do you compare Indian drone technology with that of our adversaries?
[color=hsl(0,0%,0%)]Compared to our adversaries, I would say Indian drone technology is significantly more competent and reliable. Pakistan largely depends on Chinese drones, which, in terms of performance and reliability, are not at par with what Indian companies are producing today.
[color=hsl(0,0%,0%)]That said, there is still a gap between where we are and where we need to be. India needs to continuously develop its drone technology to reach global standards of competence. The positive side is that we have learned lessons from past conflicts, and today the Indian drone industry is innovating aggressively.
[color=hsl(0,0%,0%)]The Atmanirbhar Bharat initiative has given a strong push to self-reliance in engineering and electronics, and this is crucial because wartime supply chain disruptions have taught us the importance of being self-reliant. The government’s reforms, including tax relaxations and policy support, are already encouraging domestic players, and I believe we will see major results in the near future.
[color=hsl(0,0%,0%)]You mentioned that India has learned from past mistakes. Could you elaborate on the kind of mistakes you are referring to?
[color=hsl(0,0%,0%)]In any conflict, nothing is 100 per cent foolproof. There have been instances where adversary drones penetrated Indian airspace and were not immediately neutralised. That highlighted the urgent need to strengthen our counter-drone systems.
[color=hsl(0,0%,0%)]This is where indigenous systems like the Sudarshan Chakra, which is being developed, will be vital. Such systems will play a critical role in securing Indian skies against hostile drones in the future.
[color=hsl(0,0%,0%)]Is Anadrone Systems working on anti-drone solutions as well?
[color=hsl(0,0%,0%)]Not at the moment. Our focus is primarily on drones themselves. However, given the importance of counter-drone systems in modern warfare, it is certainly a space we may enter in the future. The need is growing rapidly, and it is only natural for us to explore it.
[color=hsl(0,0%,0%)]Your website mentions participation in over 300 missions. Could you explain what these missions involve?
[color=hsl(0,0%,0%)]These are largely DRDO missions of national importance. Our drones have been used as aerial targets for testing surface-to-air and air-to-air missiles, as well as for gun-firing trials. Each mission helps validate critical defence systems, and we are proud to have been a trusted partner in so many of them.
[color=hsl(0,0%,0%)]Do you collaborate with foreign armed forces or participate in exercises abroad?
[color=hsl(0,0%,0%)]Not currently. But yes, we are actively exploring such opportunities. Our first focus will be the Asia-Pacific and Far East regions. From there, we will look to expand into Africa and the Middle East.
[color=hsl(0,0%,0%)]Do you currently export drones? If not, which regions do you see as potential markets?
[color=hsl(0,0%,0%)]We have not begun exports yet, but in the current financial year, we are targeting Southeast Asia as our first international market. Countries like Indonesia, Malaysia, and the Philippines hold strong potential. After that, we plan to expand into Africa and the Middle East.
[color=hsl(0,0%,0%)]What is your assessment of the Indian drone market size, particularly in defence applications?
[color=hsl(0,0%,0%)]The Indian drone market is already worth several billion dollars, and it has the potential to grow to USD 5-7 billion over the next decade. With increasing demand for kamikaze drones and other advanced systems in modern warfare, the market will expand significantly. This is an industry that is only going to grow larger with time.
[color=hsl(0,0%,0%)]Your company reportedly raised significant funding recently. Could you clarify this?
[color=hsl(0,0%,0%)]We were bootstrapped until last year. Recently, we raised funds to support the development of a new order we received under the IDEX programme. The funding is being used specifically for that purpose. We are not planning to raise more at the moment, but we do intend to enter the capital market with an IPO in the next couple of years.
[color=hsl(0,0%,0%)]What further reforms or support do you think the government should provide to sustain the Indian drone sector?
[color=hsl(0,0%,0%)]The government has already taken commendable steps by reducing GST on defence drones to zero and on commercial drones to 5 per cent. But more needs to be done to build a complete ecosystem.
[color=hsl(0,0%,0%)]Drone companies, especially smaller ancillaries, need regular demand, sustainable financial support, and a robust domestic supply chain. Defence contracts are irregular by nature; a company may receive just two or three orders in a year. Without an ecosystem that provides financial assistance, subsidies, and transparent support mechanisms, many small firms may not survive.
[color=hsl(0,0%,0%)]India should aim to replicate what China has done, building not just for domestic requirements but for the global market. A strong ecosystem will allow the Indian drone industry to sustain itself and scale globally.
[color=hsl(0,0%,0%)]Finally, where is your manufacturing facility located? Do you have expansion plans in other parts of India?
[color=hsl(0,0%,0%)]Our plant is located near Bhubaneswar, Odisha, and is spread across 10 acres. It is a new facility, and for the next two to three years, it will more than suffice for our production requirements. At present, we do not see the need for expansion elsewhere, though we will evaluate options depending on future demand. |
