ZeroDrag, Dreamfly Take On China in India Drone Supply Chain
24 Jul 2026
India's drone industry has a China problem. Autopilots, flight controllers, navigation modules, cells, and battery packs — the core nervous system and power source of any drone — are still largely imported, much of it from China. Two Indian startups are betting that founders and enterprise buyers are ready to pay for a domestic alternative.
ZeroDrag, incubated at the IIT Delhi research park and now operating out of Nagpur, builds avionics and flight controller hardware. "We're not building drones. We're building what every drone needs," says CEO Shantanu Bhede. The company just closed a Rs 6.5 crore seed round led by Transition VC, following a Rs 1.2 crore pre-seed round in 2023 backed by Enrission India Capital and angel investors. Bhede, alongside COO Amit Nimje, argues that scaling India's UAV industry requires an avionics layer the country can actually rely on — and that it has to be built domestically.
Dreamfly Innovations, a Bengaluru-based battery maker founded in 2021 by CEO Kajal Shah and Dr Saurabh Markandeya, is tackling the power side of the equation. The company raised a Rs 12 crore seed round led by Avaana Capital in February 2025, adding to a Rs 4.9 crore angel round in 2023. With a team of about 27 people, Dreamfly has filed two patents covering thermal management and safety. Its thermal case design lowers operating temperature by up to 20 degrees Celsius, and its batteries are engineered to function down to minus 30 degrees Celsius — a spec aimed at high-altitude flying, where most Indian drones currently manage only 20 to 30 minutes per flight. Dreamfly already counts Tata Advanced Systems, Larsen & Toubro, General Aeronautics, and Neosky India (a RattanIndia Enterprises subsidiary) among its customers.
The strategic backdrop
The report frames both companies as a response to a structural vulnerability: heavy dependence on Chinese-made electronics, cells, and packs leaves India's military and civilian drone fleets exposed to supply disruptions or geopolitical tension. Components like flight controllers, autopilots, and battery cells/packs are flagged as among the most commonly imported parts for Indian drone makers — a single point of failure that domestic suppliers are now trying to address.
There's also an export angle: manufacturers in the United States and Europe are reportedly looking for non-Chinese drone components, which could open international demand for Indian-made hardware beyond the domestic market.
ZeroDrag isn't stopping at flight controllers — it plans to expand into enterprise-grade UAV hardware over the next couple of years, including systems for heavy-lift drones and eVTOL platforms, signaling ambitions beyond its current niche.
What's missing from the picture
The report leaves several gaps that founders and investors evaluating this space should note. There's no disclosed data on ZeroDrag's current customer base, deployed units, team size, revenue, or valuation. Neither company's cost or performance has been benchmarked against Chinese-made equivalents. There's no mention of government policy support — such as PLI-style incentives — that might be accelerating or subsidizing this shift, and no figures on the total addressable market for Indian drone avionics or batteries, or what share Chinese suppliers currently hold. It's also unclear whether either company's components are being used in military applications specifically, despite the strategic framing.
Why founders should care
For early-stage founders — especially in hardware, deep tech, or supply-chain adjacent categories — this pattern is instructive, though still early-stage. The funding sizes here (Rs 1.2 crore to Rs 12 crore) suggest investor appetite for import-substitution plays in critical hardware is real but still nascent; this is likely a signal rather than a proven playbook. Partnerships with large industrial players like Tata and L&T may indicate that enterprise validation — not just consumer traction — is a plausible go-to-market path for hardware startups solving supply-chain dependency problems. Founders building in adjacent categories (sensors, navigation modules, motors) may find that similar "designed in India, for India" positioning resonates with both investors and enterprise buyers, particularly if export demand from the US and Europe materializes into actual orders rather than just interest.
At the same time, without clearer data on market size, cost-competitiveness versus Chinese suppliers, or policy tailwinds, it remains uncertain how quickly this substitution trend will scale — or whether it's confined to a narrow, defense-adjacent segment of the market.