In late December, 2025, the FCC sent shockwaves through the commercial drone industry when it added all foreign-made drones and critical components to its Covered List. While it’s critical to note that this decision applies only to new drones and components and that hardware that had already been approved for sales and marketing in the U.S. can remain on shelves, the decision is still a significant one for the industry as operators try to figure out how to plan for their future fleets. The good news is that multiple conditional approvals have been made to foreign companies from allied nations, but there is still uncertainty ahead for the domestic industry.

Recently, the Commercial Drone Alliance (CDA) released a new white paper entitled Advancing the Domestic Drone Industry, which examines what’s next for the industry and argues that policy so far has been too much stick and not enough carrot. In other words, there is support for growing manufacturing in the U.S. – and they say the FCC decision sends a “clear signal to the domestic ecosystem about the importance of domestic drones to the federal government.” However, they say, there is a crucial next step to provide the U.S. industry with the resources necessary to truly thrive in this new regulatory environment – the carrot. To accomplish this, the CDA promotes what they call a “whole-of-government approach” to support the industry in achieving the collective goal of American drone dominance.

The paper identifies two structural headwinds holding the industry back. On the demand side, an undefined regulatory environment for routine drone operations has made operators hesitant to invest, suppressing the demand signal that domestic manufacturers need to achieve competitive scale. On the supply side, decades of offshoring have left the U.S. dependent on foreign production of critical components like flight controllers, cameras, sensors, motors, batteries, and the printed circuit board assemblies that underpin modern electronics. Standing up that manufacturing capacity domestically, the CDA notes, is "exceedingly costly for any one company."

To address both problems, the CDA lays out six policy recommendations. The first is a White House-led Drone Dominance Task Force, chaired by the Office of Science and Technology Policy, to coordinate interagency efforts across the federal government. The second is strengthening the domestic demand signal, both through grant programs targeting public safety agencies and infrastructure operators, and through regulatory action. On that front, the CDA calls on the FAA to finalize its BVLOS rule in a way that enables scaled operations without burdening the tens of thousands of UAS already performing valuable missions today, and on the TSA to scale back its proposed rule on commercial drone security measures and engage with industry to develop “right-sized and collaborative security measures for commercial drone operations.”

The remaining recommendations focus on financing, certainty, and infrastructure. The CDA wants expanded access to capital through existing mechanisms such as Defense Production Act Title III authorities and Small Business Administration (SBA) loan programs, alongside amendments to the 45X tax credit to incentivize domestic drone and component manufacturing. They're also calling for an industrial base survey to inform a realistic component transition plan, and for the Buy America standard exception to be extended through 2029 to give companies planning room. On workforce and technology, the paper flags a shortage of skilled labor in precision manufacturing and a disconnect between civil and defense R&D efforts — and calls for a coordinated technology gap assessment with a one-to-three-year target for closing it.

Of course, as the CDA notes, none of this will be quick or easy. The paper acknowledges that onshoring will increase costs in the short term and that building a fully domestic ecosystem will require intentional engagement across government and industry over the next decade. As they put it in the conclusion, the FCC action "can serve as a catalyst,” but only if positive support accompanies the punitive measures already in place.

Read the report in its entirety here.