From Soham Chatterjee and Bijoy Anandoth Koyitty, Reuters: A leaner U.S. defense budget means there will be less scope for big defense programs, but drone makers are betting that a focus on intelligence gathering and risking fewer lives in combat will keep the market growing. . . .

Global spending on drones is forecast to nearly double in the next decade, growing to $11.3 billion a year — and suggesting a near-$95 billion market over the next 10 years, according to industry research firm Teal Group.

Big-hitters in the market include Boeing (BA.N), Northrop Grumman (NOC.N) and Lockheed Martin (LMT.N), as well as privately-held General Atomics Aeronautical Systems and Textron Systems-owned (TXT.N) AAI Corp.

As companies develop next-generation UAV features to cater to their primary defense market, their efforts are focused on two areas: weaponization and intelligence.

"Historically, we have seen larger aircraft like the General Atomics’ Predator as a weaponized variant. We’re seeing a trend of weaponization down to smaller classes gaining momentum," said Michael Lewis, an analyst at Lazard Capital. . . .

The Obama administration has begun consulting Congress on plans to sell Global Hawk spy planes to South Korea, a Reuters report has said. Such a deal would need a waiver of the Missile Technology Control Regime (MTCR), a voluntary arms control pact involving at least 34 countries.

Both surveillance and armed U.S. drones, which have been widely deployed in Afghanistan and Iraq, have received strong interest from Japan, Australia, Saudi Arabia and nuclear neighbors India and Pakistan, among others.

AeroVironment, AAI, Northrop Grumman and General Atomics have principally sold their UAVs to NATO allies. Exports make up just 7 percent of AeroVironment’s sales, and 6 percent of Northrop’s. . . .

The Defense Security Cooperation Agency that oversees foreign military sales is working on pre-approved lists of countries that would qualify to buy drones with certain capabilities.

Meantime, NATO sales might provide some relief.

"As our NATO partners attempt to standardize their weapons portfolios more in line with what the U.S. uses, we will see more sales of systems such as AeroVironment’s Puma and Raven UAVs," said Lazard’s Lewis.  (photo: Northrop Grumman)