Inside India’s Rs 1 trillion plan to take defence prototypes towards production—starting with YETI

The aircraft is ideaForge’s Project YETI, an autonomous fixed-wing vertical take-off and landing platform being developed for military and civilian logistics.

YETI has been described as an autonomous logistics platform with stated payloads ranging from 50 kg to 200 kg and a claimed mission range of up to 200 km, depending on configuration. Its payload-range trade-offs remain development-stage targets until independently demonstrated. For forces operating across mountains, deserts and island territories, that could mean resupplying isolated positions or evacuating casualties without committing a helicopter and crew.

But ambition does not amount to operational readiness. In its Annual Report 2025-26, ideaForge placed YETI at Technology Readiness Level (TRL) 4 with a target of TRL 9 within three years, addressing a market expected to exceed USD 5 billion in India over the next decade.

The company said its first technical demonstrator had completed a hover test with all subsystems integrated, while the design of a second demonstrator was under way. These are development-stage milestones, not a commitment by a military user to acquire the aircraft. As of August 2026, neither ideaForge nor the Ministry of Defence (MoD) had publicly disclosed a production order for YETI.

The government is nevertheless prepared to share some of the development risk. Under the Research, Development and Innovation (RDI) Scheme, ideaForge has received a Letter of Intent for in-principle debt financing of up to ₹151 crore for YETI. It is neither a grant nor a completed disbursement: final documentation, matching finance and milestone-linked releases remain to be completed.

That is where the story becomes larger than one drone. The RDI Scheme is intended to finance the costly scale-up from an early prototype towards a competitive product. Depending on the project appraisal, this can include engineering, validation, manufacturing capability, and other approved development costs. It cannot itself freeze military requirements, schedule user trials or issue a purchase order.

YETI therefore occupies the precise point at which Indian defence innovation often loses momentum: a technology has advanced far enough to attract public money, but not far enough to secure a dependable customer. India’s missing middle is not merely the distance between prototype and production. It is the distance between a promising machine and a military willing to buy it.

Who Pays After The Prototype?

The RDI Scheme was approved by the Cabinet on July 1, 2025 and launched on November 3, 2025. Its ₹1-lakh-crore outlay is spread over six years. It targets strategic and sunrise domains including energy security and transition, quantum technologies, artificial intelligence, biotechnology, space, robotics and the digital economy, while also supporting technologies important for strategic indigenisation and economic security.

Its real significance lies in the form of capital it offers. Through intermediaries such as the Technology Development Board, companies at TRL 4 and above can generally receive RDI support of up to 50% of assessed project cost, with the balance ordinarily mobilised by the company or other investors. TDB’s published framework provides for milestone-linked debt with maximum tenures of up to 15 years for projects from TRL 4 and up to 12 years for projects from TRL 6, alongside equity participation and debt-to-equity-conversion structures. Specific facilities may carry different terms.

This is the kind of money deep-technology companies struggle to obtain. Banks want collateral and predictable cash flows. Venture investors may accept technical risk, but defence programmes can involve years of testing, uncertain procurement schedules and one overwhelmingly important customer: the government.

A credible prototype can consequently run out of money before it becomes a product. Further engineering, specialised tooling, certification, supplier development and a production facility can cost far more than the original demonstration.

Existing programmes such as the Innovations in Defence Excellence (iDEX) and the Defence Research and Development Organisation (DRDO) Technology Development Fund (TDF) support technology development against defence challenges and user requirements. The RDI Scheme is designed to address a different financing need: the cost of scaling R&D beyond an early prototype towards a commercially and industrially viable product.

The programmes may overlap in technology maturity and are not necessarily sequential. RDI’s distinctive role is to supply scale-up finance; it does not itself create the subsequent acquisition pathway.

Approved Capital Is Not Operational Capability

According to TDB data in July 2026, 22 projects had been selected, with a combined project cost of approximately ₹4,744 crore and RDI support of about ₹2,192 crore. Reported recipients include ideaForge, Agnikul Cosmos, Dhruva Space, GalaxEye, Manastu Space, Tejas Networks, EndureAir and the ePlane Company.

Those figures are substantial, but they represent approvals, not money already sitting in company accounts. On May 16, 2026, TDB said agreements had been signed for five RDI projects and that ₹50 crore had been electronically transferred to Eyestem Research as the scheme’s first company-level disbursement. The same update said it had received 124 proposals representing demand exceeding ₹25,000 crore.

That demand shows how badly India’s deep-technology sector needs long-term capital. It also underlines the distinction that will determine the scheme’s credibility.

Approved assistance is not disbursed capital. Disbursed capital is not sales revenue. And sales revenue is not an operational military capability. For a defence company, the journey can still stall after every financial milestone has been met. A requirement may change. A trial may be postponed. Certification may take longer than expected. An initial order may be too small to support the production capacity assumed in the project plan. Even patient capital has a clock. Engineers, suppliers and investors may not.

What India’s Defence Delays Reveal

A Comptroller and Auditor General (CAG) audit of DRDO mission-mode projects offers a warning about what happens when development, testing and induction move on different clocks.

The audit found that 119 of 178 projects examined had missed their original schedules. In 49 cases, the additional time exceeded the full development period originally approved. It also found that 20 of 86 projects declared successful had not achieved one or more key objectives.

The audit concerned DRDO, not the RDI Scheme. But the bottlenecks it identified – changing specifications, delayed user trials, project management problems, and delays in supply orders, are precisely the problems private defence companies also face.

The difference is that a government laboratory does not have to convince investors to finance its payroll while it waits for the next trial window. A start-up does. Concessional capital can reduce the cost of that wait. It cannot make indefinite delay commercially sustainable.

Why YETI Is the Critical Test

The military case for autonomous logistics aircraft is credible. India has remote, high-altitude regions where road travel can be slow, exposed, or at times impossible. Unmanned aircraft could carry supplies on some routes without committing a helicopter and crew.

But YETI must first prove its payload-range performance, reliability, high-altitude operation and ability to function in difficult weather and communications environments. It must complete user trials and obtain the necessary clearances. A sponsoring Service would then need to assess how such aircraft fit its logistics concept, including trial performance, maintainability, interoperability, certification requirements and life-cycle cost, before moving through the applicable acquisition route.

A dedicated production line and deeper supplier commitments become easier to justify only when ideaForge has clearer demand visibility through defence orders, credible civilian demand, export prospects or some combination of these.

YETI is not the only platform approaching this opportunity. EndureAir has received RDI support, facilitated through the TDB, for SABAL-200. This heavy-lift unmanned helicopter platform, the company says, is designed to carry more than 200 kg in high-altitude and rugged terrain.

Funding competing approaches can be sensible. It provides the military with alternatives and puts pressure on developers to deliver. But funding multiple aircraft without a common testing and acquisition pathway could just as easily produce multiple expensive demonstrations awaiting the same undecided customer.

The wider RDI portfolio includes space platforms, communications systems, batteries and electric aircraft. Its dual-use focus is a strength because civilian markets can help companies generate revenue without depending entirely on defence procurement.

Yet dual-use demand is not an escape from the customer problem. A system proven in mining, disaster relief or commercial logistics is not automatically ready for a battlefield. Military users impose different standards for reliability, security, electronic resilience and operation under hostile conditions.

Connecting Finance With Procurement

The solution is not to guarantee a purchase to every company receiving RDI assistance. The armed forces must retain the right to reject technology that fails in trials or no longer meets an operational requirement. But companies should not be asked to spend years developing military systems without knowing who will test them, how they will be evaluated or what happens if they succeed.

Strategic projects need a clear line of sight to procurement. For defence-specific projects receiving large-scale development finance, the government should require an identified sponsoring Service or government user, a defined operational use case, measurable trial criteria, a scheduled trial window and a named certification authority. Meeting pre-agreed performance thresholds should open a defined route to a limited-series order. Larger purchases should remain conditional on proven performance under operational conditions.

That would not turn RDI financing into an assured-order programme or weaken the Services’ right to reject technology that fails trials or no longer meets an operational need. It would establish the tests of success before a company commits years of capital, engineering effort and organisational capacity. Funding and procurement should remain separate judgements, but they cannot continue to operate on separate timelines.

The scheme’s real measure will therefore be conversion: approvals converted into disbursements, prototypes into trials, trials into production orders and initial orders into repeat purchases. Counting sanctions alone will reveal how much money the government was willing to promise, not how much capability India managed to create.

The RDI Scheme gives Indian technology companies something they have long lacked: time. But if YETI, SABAL-200 and other projects meet their milestones only to circle for years around changing requirements and delayed trials, the government will have financed a holding pattern. If they are tested, certified, manufactured and deployed, India will have created something far more valuable than another innovation fund: a repeatable route from technological ambition to operational power.

The scheme’s defining milestone will not be the announcement of its ₹1-lakh-crore outlay. It will be the day an Indian strategic technology travels from a sanction letter to a repeat order, and from the factory floor to an operational unit. Until then, India will not have bridged the missing middle. It will merely have made waiting cheaper.

Aritra Banerjee is a senior journalist with Financial Express specialising in the intersection of defence, space, emerging technologies, industrial policy and the global energy transition.

Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.

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