The Young Drone Industry Now Has the Opportunity of the Century

Behind tanks, military vehicles, and vessels at the military parade in Zagreb on the occasion of the 30th anniversary of the VRO ‘Storm’, the Croatian public was able to see drones for the first time among military equipment, the first unmanned aerial vehicles of domestic production. Although many heard about the company producing them, Orqa, for the first time, it is a well-known Osijek manufacturer in business circles that has been developing FPV (first-person view) technology for glasses and components for drones for various purposes for years, selling them in fifty foreign markets. Given that Defense Minister Ivan Anušić has repeatedly emphasized the plan for Croatia to become a European leader in small combat drones, with the ambition of assembling as many as half a million units per year, Orqa has established itself as a logical partner in this field. Thus, the market for unmanned aerial vehicles has come into the spotlight, as well as discussions about their wide potential.

Orqa’s Broader Leadership Ambitions

Orqa’s co-founder and director Srđan Kovačević confirms that the Croatian drone market is rapidly developing, but also that it is growing steadily and sustainably in the long term. The shift, he says, is also visible in the education of personnel needed to work with such advanced technologies. From a business perspective, it is not surprising that Orqa, founded in 2018 in Osijek, eagerly accepted a business offer to produce combat drones. Implementing this government plan, Kovačević notes, would undoubtedly open up additional business opportunities for them, but they were attracted to this decision by something else.

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– We consider it most important that the Croatian Army has a guarantee in our company regarding domestic development, technological, and production capacities, which contributes to national security in these unstable times – Kovačević states.

Namely, Orqa wants to be a leader in unmanned technologies not only in Croatia but also across the entire West, following the example of the Chinese DJI, which is the global market leader in this segment. This largest global drone manufacturing company is also Orqa’s biggest competitor, which is why Kovačević considers the main challenge in the industry of the entire Western market to be separating from Chinese components.

Besides Orqa, which leads in production, the actual capacity of the Croatian drone industry and its export potential are still developing. Current geopolitical events in the world, such as the war in Ukraine, and military plans of the Croatian government could only increase the demand for drones and create new opportunities for domestic market players, of which there are currently not many. They are mostly small and medium-sized companies that produce and export drones or systems for their control (some only distribute them). However, the application of drones is much broader than military – from various surveillance to monitoring the condition of forests and agricultural areas. As was recently seen at Thompson’s concert in Zagreb or at major sporting events, drones are also used for entertainment purposes, for light shows. However, at Thompson’s concert above the Zagreb hippodrome, it was not Croatian drones that flew, but those from Dubai. Nevertheless, domestic companies are developing solutions that cover equally diverse applications, even more innovative ones.

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Boring, Dirty, and Dangerous

Drones contribute most to jobs known as 3D – dull, dirty, and dangerous – emphasizes Antonella Barišić Kulaš, the chief researcher at the Laboratory for Robotics and Intelligent Control Systems (LARICS Lab) at the Faculty of Electrical Engineering and Computing in Zagreb. These are, she says, ‘activities that are risky and dangerous for people and expensive and repetitive or inefficient to perform manually’.

– Drones in such cases enable faster, safer, and cheaper task processing, without exposing people to unnecessary risk. This includes monitoring infrastructure, construction sites, crop monitoring, inventory in warehouses, and rescue operations in difficult conditions – explains Barišić Kulaš, also a co-founder of the young company Odonata Technologies, which develops an AI-based drone system that automatically inventories goods in warehouses from the air, eliminating the need for working at heights, manual scanning, or stopping logistics processes.

Among other manufacturers, she highlights Alpha Sagittarius, a Split company that develops its own unmanned aerial vehicle (UAS) systems, and AVITEH, the market leader in Croatia in the distribution of drones and related equipment. Barišić Kulaš is also the chair of the Organizing Committee of ‘DroneDays’, a two-day conference on unmanned aerial vehicles that has been held in Zagreb for the past few years. Numerous domestic and foreign innovators present their work on drones there, including participants in the ‘Nuqleus’ project conducted within the Innovation Center ‘Nikola Tesla’ at FER. It is precisely from the academic and scientific community that technological companies and products can develop into commercial solutions.

– In Croatia, we have a strong innovation scene in the field of drones, from faculties to technology companies. Innovative hardware components, communication technologies, data analysis software, and solutions for autonomous operations are being developed. This combination of academic knowledge and entrepreneurship creates a good foundation for the further development of the domestic drone industry. It could be said that the market is still young, but the need for drones and related solutions is constantly growing – believes Barišić Kulaš.

The Question of User Responsibility

The growth of the drone market in Croatia year by year is also evident from the increasing number of registered operators and users of unmanned systems, says Željko Riha, vice president and spokesperson of the Association of Unmanned Systems in Crisis Situations (BSKS). Drones have become more accessible, and technology has advanced, which has further stimulated their spread, Riha explains, but he notes that with market growth comes responsibility in using drones and adhering to regulations, with the summer months being particularly challenging. Namely, drones are also used by civil protection, police, and firefighters, especially in summer during the fire season for terrain reconnaissance and monitoring fire sites. Riha explains that drones are also used in searches for missing persons, in flood defense monitoring, and traffic accidents. Therefore, he cites their unsafe and irresponsible use, especially near emergency interventions, as the biggest risk.

– Unauthorized drone flights can jeopardize the safety of firefighting aircraft crews, cause mid-air collisions, and thus endanger the lives of firefighters and other participants on the ground. There is also a risk of a drone falling on people, property, or in areas with many citizens. We can mitigate risks through user education, consistent application of legal regulations, and active use of the AMC portal (Airspace Management Cell) and a mobile application for reporting flight operations. Every drone operator must be aware of their responsibility and always inform themselves about the status of the airspace before flying – warns Riha.

The responsibility of the operator is also emphasized by the director of OneDrone, Goran Bajči. He also explains that in addition to unmanned aerial vehicles, drones also include unmanned ground vehicles (UGV) and unmanned submarines or maritime drones. He points out that in Croatia, according to data from the Croatian Air Navigation Services, approximately 4,500 drone operators are registered, noting that one operator can have several such aircraft.

– Although this may sound like a lot at first, it is a shocking number because there are certainly twice as many illegal or unregistered operators – notes Bajči.

The Chinese Do Not Understand Bans

Registration and proper management of drones are extremely important. In China, however, where OneDrone was recently trained by DJI, the world’s largest drone manufacturer (the same one against which Croatian Orqa is the biggest competitor in Western markets), drones fly freely even in large cities like Shenzhen or Hong Kong. As Bajči recounts, when they discussed unmanned aerial vehicles in agriculture there, the Chinese did not understand why there are so many bans on the use of agricultural drones in Europe; in their case, ‘every grandmother on the farm has her own drone’.

– The regulation was not devised by someone in Croatia because they were bored. It comes to us at the EU level from EASA. The European Union Aviation Safety Agency has regulated the rights and obligations of drones and operators with several regulations. However, many do not understand this today and choose to be illegal because they believe their presence in the air is negligible and that they cannot cause significant damage. If you talk to any sports or professional aircraft pilot, they will certainly not agree with that statement because drones in the air pose a great danger to manned aircraft and passengers – explains Bajči.

In addition to selling professional and hobby unmanned systems and the software needed to operate drones, OneDrone produces long-range unmanned aerial vehicles under its ElevonX brand in Slovenia, but also places great emphasis on training operators (companies and individuals) for various categories of drone flying. Its clients include both small and large companies and various institutions to which it also offers fleet management services and the development of operational manuals for organization. OneDrone operates in Slovenia, Croatia, and North Macedonia and is the only company in the region that takes a comprehensive approach to drone business. Bajči says that companies are aware of the potential of drones but lack the knowledge to properly implement them in their business. Given that drone technology has advanced significantly in recent years (batteries, propulsion and communication systems, navigation and positioning systems, sensors), especially in the corporate segment, there is also a growing trend of educating staff who use these systems.

– If you do not know the systems and regulations well enough, you will not be able to utilize their full potential, and it will take you longer to recoup your investment. Today, without a well-trained pilot and a well-organized structure, you have no place in the market – adds Bajči.

Ignorance of the capabilities of drones is seen as a brake on market development and drone application. Poor management can also cause damage, as can legislation.

– The development of technology is always faster than legislation. Drones could be applied even more today, but legislation cannot keep up with the pace of development, especially in Europe, where we have buried ourselves in bureaucracy – says Bajči.

Regulation is a Double-Edged Sword

He explains this with the example of docks or ‘drones in boxes’, i.e., systems for automatic flights with minimal pilot supervision, often over long distances, the most well-known and widely used being the Chinese DJI docks. These drones are in a special category and due to legal regulations cannot be used to their full potential here. More precisely, the Croatian Air Navigation Services do not approve flying drones outside the pilot’s line of sight. Now, Bajči explains, efforts are being made to meet the conditions for flying such aircraft. OneDrone has taken the first step towards this – it was the first in Croatia to create a local central server for flying to protect confidential flight information, important for users such as government services because the data remains stored in their infrastructure and is not accessible to the manufacturer (Chinese DJI) and third parties. They hope to see further steps as early as autumn.

In the commercial segment of the industry, the biggest problems, our interlocutors say, are created by regulation. Barišić Kulaš explains that the EU ‘has high standards for both drone components and airspace regulation, which manufacturers and pilots must comply with’, and the very high costs of developing drones and related software are also an obstacle. Co-founder and director of Arkensight, Domagoj Ćorić, describes regulation as a double-edged sword – it is important for the safety of people and infrastructure, but it hinders rapid commercialization. In the service sector, which accounts for almost 75 percent of the unmanned aerial vehicle market, it is difficult to find new clients, adds Ćorić, and in the military segment of the industry, he sees industrialization and the possibility of mass production as the biggest challenge.

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– Without those components, the product is nothing more than a cool prototype. The development of huge industrial capacities that can produce unmanned systems and components on a large scale is currently the main problem of the West – says Ćorić, who believes that Croatia has top experts and companies in the field of unmanned aerial vehicles.

– The technology is there, but the industrial capacities for mass production of aircraft, electronics, and weapons, which are the backbone of defense and deterrence, are nowhere near in sight. Drastic changes need to be introduced, significant investments made, and public services accelerated for Croatia to become competitive in the global market – states Ćorić.

For military purposes, he sees a huge application of artificial intelligence and AI agents, especially for surveillance and data processing on the battlefield.

The Importance of Involvement in IPCEI

Kovačević believes that for strengthening Croatia’s leadership position and greater competitiveness in the global market, it is extremely important that ‘Croatia actively participates in the European initiative IPCEI (Important Projects of Common European Interest) for semiconductors and microelectronics, as well as in similar strategic programs that encourage investment in key technological areas. Special attention should be directed to sectors closely related to robotics, primarily semiconductors and microelectronics, because, in Kovačević’s opinion, innovations in that area will dictate the progress of robotics in the next five to ten years.

Although the drone market has received deserved attention in recent years, both due to military applications and many other uses, specific development is slowed down by regulations that, while necessary, clearly limit their use and commercialization. Nevertheless, due to the great potential and expertise we have in this area in Croatia, it is necessary to find sustainable business models as soon as possible and intensify education on the proper and safe use of drones.