
Next big arms race: Who can build the most drones nobody minds losing, America, Russia or China?
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Manufacture fast, train hard, buy American
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From theory to trenches
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The supply chain challenge
Fighting with drones like ammunition
US Defence Secretary Pete Hegseth wants drones to be seen for what they've really become: disposable munitions, not prized aircraft. This shift, spelled out in a sweeping new Pentagon memo, could reshape how the United States fights, builds, and trains for war for decades to come.Hegseth's order tears up the old playbook that slowed drone development with paperwork, endless sign-offs, and tangled chains of command. His message is blunt: the enemy is churning out millions of cheap drones every year — Russia alone aims for four million this year, Ukraine even more. Meanwhile, US frontline units have been forced to make do with decades-old procurement systems designed for F-35s, not quadcopters.So, the Pentagon is flipping the table. Under the new rules, small drones — Group 1 and Group 2 in Pentagon-speak — are reclassified as consumables. Think hand grenades, not stealth bombers. Commanders at the O-6 level — colonels, captains, equivalents — now have the green light to buy, test, modify and deploy these drones directly, no more waiting for approval from the top brass or the distant bureaucracy.At the core of this pivot is an industrial push. 'Our overt preference is to Buy American,' Hegseth insisted. That means direct loans, advance purchase deals, and fast-track approvals for homegrown drone makers. The goal? A home-grown swarm of cheap, clever drones designed by American engineers and AI experts. Not one or two prototypes , but millions.The overhaul rests on three pillars. First, expand domestic production. Hegseth wants American drones built by American companies. The memo demands the Pentagon lean hard on domestic suppliers, using direct loans, advance purchases and private capital to flood the force with cheap, expendable drones.'Our overt preference is to Buy American,' Hegseth writes. 'We will power a technological leapfrog, arming our combat units with a variety of low-cost drones made by America's world-leading engineers and AI experts.'Second, he wants process reform. Building drone dominance isn't just about tech — it's about speed. Past rules treated small drones like fighter jets, bogging them down with the same airworthiness certifications and NATO standards meant for billion-dollar aircraft. From now on, small drones won't need the same testing. They'll be made, modified and lost in combat — and replaced just as fast.'Drone dominance is a process race as much as a technological race,' Hegseth writes. The new approach fuses frontline needs with the factory floor. Prototypes, 3D printing, battlefield tweaks — all encouraged.Hegseth wants the entire procurement model flipped. 'Drone dominance is a process race as much as a technological race,' he wrote. New drones will skip heavy NATO standards when they make no sense for cheap flying bombs. No more forcing small drones to meet the same paperwork as big jets.The third pillar is training. By the end of 2026, every US Army squad must have one-way attack drones in its kit. By 2027, major training events must include drones, swarm scenarios, live-fire tests, drone-vs-drone battles. Senior officers are under orders to strip away range restrictions, expand testing grounds, and make drone use second nature.'Lethality will not be hindered by self-imposed restrictions,' Hegseth said last week. 'Drone technology is advancing so rapidly, our major risk is risk-avoidance. The Department's bureaucratic gloves are coming off.'This pivot isn't academic. In Ukraine, drones have turned trench warfare into a tech race. Cheap first-person-view (FPV) kamikaze drones drop grenades through tank hatches. Commercial quadcopters spot artillery targets. More than 70 percent of Ukraine's battlefield casualties this year are linked to drones.Meanwhile, in the Pacific, the US faces China's vast manufacturing might. Chinese drone makers dominate the global civilian market — and parts of the military supply chain too. That's a vulnerability Washington wants closed fast.The memo spells this out. Every military branch must stand up new units, dedicated to getting drones out of PowerPoint slides and into soldiers' hands. These units will test designs, tweak them with 3D printers, feed lessons back to manufacturers and scale up production. Indo-Pacific Command gets first dibs — the clear signal is that the US is preparing to counter China's mass.There's also a nod to the Replicator Initiative, launched in 2023 to push thousands of cheap, smart drones to the front lines. Progress has been slow. Hegseth's memo basically tells everyone: move faster.All this ambition depends on supply. Ukraine's small shops now churn out 200,000 drones a month. The US doesn't yet have that kind of industrial muscle for disposable drones. The memo leans heavily on private capital and domestic startups. Executive Order 14307, signed by Trump in June, aims to open more funding taps.But getting from high-level memo to warehouse shelves won't be easy. American drone makers will need parts, batteries, secure supply chains — and they'll need to do it without relying on Chinese subcomponents. The Pentagon has been burned before by drones carrying suspect Chinese electronics.The new policy also blows open the way for improvisation. Frontline troops will be free to mod small drones on site, even build them from scratch if they have the right parts. The memo specifically allows military-made drones that meet the 'Blue List' of trusted components to skip lengthy certification.The bigger shift is cultural. For decades, the Pentagon treated UAVs as scarce, expensive assets. This new vision says drones are bullets with wings — use them, lose them, reload.There's risk in that mindset. Small drones are easy to jam, easy to shoot down. But the point isn't perfection. The point is mass. If each squad has eyes in the sky, one drone shot down doesn't matter — another is ready.Hegseth's bet is that the Pentagon can out-innovate and out-build its rivals if it gets out of its own way. Time will tell if the factory floor, the training ranges and the dusty frontlines can keep pace with the vision.For now, the message is clear: stop treating drones like prized possessions. Treat them like ammo. Build them cheap, fly them hard, lose them fast — and always have another ready to launch.
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Economic Times
14 minutes ago
- Economic Times
Don't peg your expectations from market too high; look for growth stories: Shreyas Devalkar
Shreyas Devalkar, Head-Equity, Axis MF, says the market currently favors established narratives, making them costly. Opportunities arise in sectors experiencing growth, such as manufacturing and import substitution. The government's Make in India initiative is boosting domestic production. Tourism and retail are also performing well. Private sector banks and NBFCs show potential for revival with lower interest rates. ADVERTISEMENT What is your take on the Indian markets because the Street is a bit divided? Some believe that a lot of these positives are already factored in and the valuations are expensive. But some also have the view that a lot of these positives are still to be factored in with respect to RBI rate cut, the tax cut, and India-US trade as well wherein India is expected to be in a sweet spot. Where is the market headed from these levels? Shreyas Devalkar: As far as the market is concerned, wherever there is an established story, it is always expensive. There are pockets where the stories are really established. You spoke of three aspects, the US tariff on India, the credit and the interest rate part and earnings. When it comes to the US tariff part, we have to see how it evolves, especially as it is not only about India versus US, but also India versus China, and other competing countries where they also have a comparative advantage. In such a situation, we need to wait and watch not only the tariff on India, but also on all these countries so that the end game is established. Aditya Khemka on US tariff threat over pharma and what to bet on there The way it looks, as of now, the market has tried to factor in certain gains in some aspects. So when it comes to established stories like electronics, manufacturing, services, there is a shift from China to India. The second part is the Make in India theme where we are trying to build in India and trying to reduce import dependence. It can be in solar, and is actually in multiple parts and sub-parts of even consumer durables. The government has taken multiple steps in that. Another part that is growing very well is manufacturing. Such stories are emerging very nicely and there the valuations definitely remain high. So, these stories are in capital goods, power sector, capex, and EMS, and here we are driving import substitution. On the other hand, in consumption, they are in tourism, travel and retail. Some of the retail stories are doing extremely well. These are the segments which continue to do well and where the valuations are high. We need to bear with it. As long as the growth delivery remains, the valuation may sustain. There are pockets where valuations are not that high and there is expectation of revival and that is one of the aspects which you highlighted on the credit and the lower interest rate. There, the private sector banks' valuation has not got re-rated compared to pre-Covid days. 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Shreyas Devalkar: As far as overall growth for the economy is concerned, if you take the last two decades, it was on the back of three things. One was monetary policy and that is in favour. As of now, we are seeing interest rates coming down. We are seeing that getting transmitted also by various banks and NBFC. So, its impact will be seen. ADVERTISEMENT The other aspect has been seen at multiple points in time in multiple countries – fiscal expansion. Now, there is fiscal consolidation. So not only India, most other countries are trying to do it. But fiscal consolidation has a certain impact on growth. More importantly, the third aspect is the export growth because for a large part of listed companies, especially in largecaps, there is an element of export directly or indirectly and that is where whenever the global economy is doing very well, there is a positive impact on the Indian economy. So, out of these three factors of growth, monetary policy is definitely in favour, interest rates because of the inflation coming down will also drive better growth for us. But because of the fiscal as well as the global growth not being there, the overall recovery in growth may not be as expected. So one should look at it in a more pragmatic manner as far as growth is concerned. Help us understand what sort of portfolio changes have you made of late because in your fact sheet, I believe you have reduced your weightage in autos while adding a bit more into consumers. How do you manage this positioning right now? Also, any sectors you will closely watch for increasing weightage? Shreyas Devalkar: Wherever there is growth and wherever there is earnings cut, these are the two aspects one ends up trying to predict. So, both auto and auto ancillaries have seen earnings cut both because of the global and local environment. That is where over five-six months, we have reduced our exposure. ADVERTISEMENT At the same time, despite high valuations, some of the capital goods companies, especially in the power space, have done better on the growth front. So, it is not broad-based capex as such, but definitely there are certain segments of that, segments of electronic manufacturing, import substitution, and all these in the overall capital goods space. There are multiple companies here and in that context, we have increased some exposure to that segment. As far as consumption is concerned, exposure to some retail companies was increased over the last five-six months as it is reflected in the fact sheet. (You can now subscribe to our ETMarkets WhatsApp channel)
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First Post
19 minutes ago
- First Post
Trump signals ‘very high' pharma tariffs by Aug 1, warns rates could reach 200%
Trump has signaled plans to impose new tariffs on pharmaceuticals and semiconductors as soon as the end of July, warning that rates on drug imports could eventually soar as high as 200 percent. read more President Donald Trump recently indicated his intention to impose tariffs on pharmaceuticals and semiconductors as early as the end of July. These import taxes are likely to align with broader 'reciprocal' rates set to take effect on August 1st. 'Probably at the end of the month, and we're going to start off with a low tariff and give the pharmaceutical companies a year or so to build, and then we're going to make it a very high tariff,' Trump said STORY CONTINUES BELOW THIS AD Trump, speaking to reporters while returning to Washington from artificial intelligence summit, stated that pharmaceutical tariffs would initially be low, giving companies about a year to bring manufacturing back to the US, before escalating to very high rates. He also mentioned a 'similar' and 'less complicated' timeline for semiconductor tariffs, though he didn't offer specifics. Earlier in the month, Trump had publicly discussed a 50 per cent tariff on copper and predicted pharmaceutical tariffs could reach 200 per cent after a year-long grace period for companies to reshore production. These moves stem from investigations under Section 232 of the Trade Expansion Act of 1962, where Trump argued that a surge of foreign imports posed a threat to national security. 'I would say India, and we have a couple of others, but I have to tell you, for the most part, I'm very happy with the letters,' Trump said. These potential tariffs could immediately affect major drugmakers like Eli Lilly & Co., Merck & Co., and Pfizer Inc., which have significant overseas production. This, in turn, risks driving up costs for American consumers. Similarly, semiconductor tariffs are expected to impact not only chip manufacturers but also popular products such as laptops and smartphones from companies like Apple Inc. and Samsung Electronic Co Ltd. STORY CONTINUES BELOW THIS AD Trump's tariff threats come amidst his recent practice of unilaterally dictating tariff rates to various trading partners via letters, while simultaneously asserting his willingness to negotiate. For example, he announced an agreement with Indonesia that reduced a previously announced 32 per cent tariff to 19 per cent, in exchange for Indonesia's commitment to purchase $15 billion in US energy, $4.5 billion in agricultural products, and 50 Boeing Co. jets. Trump predicted he could finalize 'two or three' trade deals before the August 1st implementation of his 'reciprocal tariffs,' with an agreement with India being among the most likely. He acknowledged substantive discussions with five to six countries but indicated he was often content with simply dictating a tariff rate rather than finalizing a full agreement. He also suggested a standard tariff of 'a little over 10 per cent' for smaller countries not receiving tailored rates. While some countries, like South Korea, have shown a willingness to 'open' trade after his threats, others, such as Japan, have not. Representatives from the European Union, facing a 30 per cent tariff, were expected to meet with U.S. negotiators. STORY CONTINUES BELOW THIS AD Trump also dismissed concerns that his recent threat of 'secondary' tariffs on Russian trading partners—if Moscow didn't agree to a ceasefire with Ukraine—could impact US consumers, despite expert warnings that such a move could drive up energy costs. He simply stated, 'I don't think so. I think that whole thing is going to go away.'


Time of India
22 minutes ago
- Time of India
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