*

India and Pakistan to invest large sums in drones after

recent

fighting

*

Delhi works with domestic players while Islamabad

collaborates

with China and Turkey

*

UAVs used by both sides to apply pressure without

significant

escalation

*

Dependence on China supply chain a concern, some Indian

officials and executives say

By Devjyot Ghoshal, Ariba Shahid, Shivam Patel

NEW DELHI/ISLAMABAD, May 27 (Reuters) - A little after

8:00 pm on May 8, red flares streaked through the night sky over

the northern Indian city of Jammu as its air-defence systems

opened fire on drones from neighbouring Pakistan.

The Indian and Pakistani militaries have deployed high-end

fighter jets, conventional missiles and artillery during decades

of clashes, but the four days of fighting in May marked the

first time New Delhi and Islamabad utilized unmanned aerial

vehicles at scale against each other.

The fighting halted after the U.S. announced it brokered a

ceasefire but the South Asian powers, which spent more than $96

billion on defence last year, are now locked in a drones arms

race, according to Reuters' interviews with 15 people, including

security officials, industry executives and analysts in the two

countries.

Two of them said they expect increased use of UAVs by the

nuclear-armed neighbours because small-scale drone attacks can

strike targets without risking personnel or provoking

uncontrollable escalation.

India plans to invest heavily in local industry and could

spend as much as $470 million on UAVs over the next 12 to 24

months, roughly three times pre-conflict levels, said Smit Shah

of Drone Federation India, which represents over 550 companies

and regularly interacts with the government.

The previously unreported forecast, which came as India this

month approved roughly $4.6 billion in emergency military

procurement funds, was corroborated by two other industry

executives. The Indian military plans to use some of that

additional funding on combat and surveillance drones, according

to two Indian officials familiar with the matter.

Defence procurement in India tends to involve years of

bureaucratic processes but officials are now calling drone

makers in for trials and demonstrations at an unprecedented

pace, said Vishal Saxena, a vice president at Indian UAV firm

ideaForge Technology.

The Pakistan Air Force, meanwhile, is pushing to acquire

more UAVs as it seeks to avoid risking its high-end aircraft,

said a Pakistani source familiar with the matter.

Pakistan and India both deployed cutting-edge generation 4.5

fighter jets during the latest clashes but cash-strapped

Islamabad only has about 20 high-end Chinese-made J-10 fighters

compared to the three dozen Rafales that Delhi can muster.

Pakistan is likely to build on existing relationships to

intensify collaboration with China and Turkey to advance

domestic drone research and production capabilities, said Oishee

Majumdar of defence intelligence firm Janes.

Islamabad is relying on a collaboration between Pakistan's

National Aerospace Science and Technology Park and Turkish

defence contractor Baykar that locally assembles the YIHA-III

drone, the Pakistani source said, adding a unit could be

produced domestically in between two to three days.

Pakistan's military declined to respond to Reuters'

questions. The Indian defence ministry and Baykar did not return

requests for comment.

India and Pakistan "appear to view drone strikes as a way to

apply military pressure without immediately provoking

large-scale escalation," said King's College London political

scientist Walter Ladwig III.

"UAVs allow leaders to demonstrate resolve, achieve visible

effects, and manage domestic expectations - all without exposing

expensive aircraft or pilots to danger," he added.

But such skirmishes are not entirely risk-free, and Ladwig

noted that countries could also send UAVs to attack contested or

densely populated areas where they might not previously have

used manned platforms.

DRONE SWARMS AND VINTAGE GUNS

The fighting in May, which was the fiercest in this century

between the neighbours, came after an April 22 militant attack

in the disputed Himalayan region of Kashmir that killed 26

people, mostly Indian tourists.

Delhi blamed the killings on "terrorists" backed by

Islamabad, which denied the charge. Indian Prime Minister

Narendra Modi vowed revenge and Delhi on May 7 launched air

strikes on what it described as "terrorist infrastructure" in

Pakistan.

The next night, Pakistan sent hordes of drones along a

1,700-kilometer (772-mile) front with India, with between 300

and 400 of them pushing in along 36 locations to probe Indian

air defences, Indian officials have said.

Pakistan depended on Turkish-origin YIHA-III and Asisguard

Songar drones, as well as the Shahpar-II UAV produced

domestically by the state-owned Global Industrial & Defence

Solutions conglomerate, according to two Pakistani sources.

But much of this drone deployment was cut down by Cold

War-era Indian anti-aircraft guns that were rigged to modern

military radar and communication networks developed by state-run

Bharat Electronics, according to two Indian

officials.

A Pakistan source denied that large numbers of its drones

were shot down on May 8, but India did not appear to sustain

significant damage from that drone raid.

India's use of the anti-aircraft guns, which had not been

designed for anti-drone-warfare, turned out to be surprisingly

effective, said retired Indian Brig. Anshuman Narang, now an UAV

expert at Delhi's Centre for Joint Warfare Studies.

"Ten times better than what I'd expected," he said.

India also sent Israeli HAROP, Polish WARMATE and

domestically-produced UAVs into Pakistani airspace, according to

one Indian and two Pakistan sources. Some of them were also used

for precision attacks on what two Indian officials described as

military and militant infrastructure.

The two Pakistani security sources confirmed that India

deployed a large number of the HAROPs - a long-range loitering

munition drone manufactured by Israel Aerospace Industries. Such

UAVs, also known as suicide drones, stay over a target before

crashing down and detonating on impact.

Pakistan set up decoy radars in some areas to draw in the

HAROPs, or waited for their flight time to come towards its end,

so that they fell below 3,000 feet and could be shot down, a

third Pakistani source said.

Both sides claim to have notched victories in their use of

UAVs.

India successfully targeted infrastructure within Pakistan

with minimal risk to personnel or major platforms, said KCL's

Ladwig.

For Pakistan's military, which claimed to have struck Indian

defence facilities with UAVs, drone attacks allow it to signal

action while drawing less international scrutiny than

conventional methods, he noted.

CHEAP BUT WITH AN ACHILLES HEEL

Despite the loss of many drones, both sides are doubling

down.

"We're talking about relatively cheap technology," said

Washington-based South Asia expert Michael Kugelman. "And while

UAVs don't have the shock and awe effect of missiles and fighter

jets, they can still convey a sense of power and purpose for

those that launch them."

Indian defence planners are likely to expand domestic

development of loitering munitions UAVs, according to an Indian

security source and Sameer Joshi of Indian UAV maker NewSpace,

which is deepening its research and development on such drones.

"Their ability to loiter, evade detection, and strike with

precision marked a shift toward high-value, low-cost warfare

with mass produced drones," said Joshi, whose firm supplies the

Indian military.

And firms like ideaForge, which has supplied over 2,000 UAVs

to the Indian security forces, are also investing on enhancing

the ability of its drones to be less vulnerable to electronic

warfare, said Saxena.

Another vulnerability that is harder to address is the

Indian drone program's reliance on hard-to-replace components

from China, an established military partner of Pakistan, four

Indian dronemakers and officials said.

India continues to depend on China-made magnets and lithium

for UAV batteries, said Drone Federation India's Shah.

"Weaponization of the supply chain is also an issue," said

ideaForge's Saxena on the possibility of Beijing shutting the

tap on components in certain situations.

For instance, Chinese restrictions on the sale of drones and

components to Ukraine have weakened Kyiv's ability to produce

critical combat drones, according to the Center for Strategic

and International Studies think-tank.

A spokesperson for China's Foreign Ministry said in response

to Reuters' questions that Beijing has always implemented export

controls on dual-use items in accordance with domestic laws and

regulations as well as its international obligations.

"Diversification of supply chain is a medium to long term

problem," said Shah. "You can't solve it in short term."

($1 = 85.0470 Indian rupees)

(Additional reporting by Saeed Shah in Islamabad, Adnan Abidi in

New Delhi, Nivedita Bhattacharjee in Bengaluru and Liz Lee in

Beijing; Writing by Devjyot Ghoshal; Editing by Katerina Ang)