Drone warfare has come into its own in recent years, and Iranian companies that have invested in military drone technology are reaping the dividends of high demand for their products. At home, both the Islamic Revolutionary Guard Corps (IRGC) and the Artesh (Iran's regular army) operate unmanned aerial vehicles (UAVs). Abroad, numerous countries have lined up to purchase Iranian-made UAVs, from Russia and Belarus to Venezuela and Bolivia.^[1] Consequently, Iran's domestic drone industry appears to be booming.

While the major players in this industry are relatively well understood, one type of entity is making a valuable but largely overlooked contribution to the industry: the privately-owned knowledge-based company. At a conference in November, Deputy Defense Minister Mahdi Farahi said that several thousand such companies are working with the Defense Ministry.^[2] These companies, akin to defense contractors, provide the industry with substantial human capital and technical expertise.

To better understand the role that knowledge-based companies play in Iran's drone ecosystem, this report reviews the most notable examples of such entities identified in open sources. They have primarily carved out niches in the domestic manufacture of components and the supply of research and development (R&D) services. Several key entities have been established for decades, though evidence of new entrants points to the growing role of such companies. While some have a connection to the IRGC, these connections are usually not overt.

As a result, Iran's military drone program, already difficult to hold back with export controls because of the near-universal availability of the relevant technologies, may become even more inured to supply-side controls in the coming years. Targeted sanctions may also prove challenging to apply, given difficulties in confirming the connection between knowledge-based companies and Iran's military drone program. Perhaps more concerning, a similar dynamic involving knowledge-based companies may emerge in Iran's missile, space, and nuclear industries.

Iran's Drone Ecosystem: An Overview
 

The entities that contribute to Iran's development, production, and use of military drones can be subdivided into five major groups.

State-owned corporations such as Iran Aircraft Manufacturing Industries (HESA) and Qods Aviation Industries (QAI), which most notably produce the Ababil and Mohajer families of drones, respectively, have formed the backbone of the industry since it began taking shape in the 1980s.^[3] These corporations, nested within the Ministry of Defense and Armed Forces Logistics (MODAFL), are involved in all stages of the drone development process, including R&D, components, and mass production.

The armed forces play a leading role too, and not only as an end-user of complete UAVs. Branches of the IRGC have had a hand in prototyping and developing drones through their respective in-house R&D units, called Self-Sufficiency Jihad Organizations (SSJOs). The IRGC Ground Force SSJO, for example, has developed the Meraj series of one-way attack drones.^[4] More prominently, the IRGC Aerospace Force and its Shahed Aviation Industries are responsible for the notorious Shahed-series drones used by Russia against Ukraine.^[5] The Aerospace Force SSJO is headed by Brigadier General Abdollah Mehrabi,^[6] a key individual in Iran's drone industry.

Iranian universities both educate UAV engineers and undertake drone-relevant research, contributing to the industry's knowledge base and human capital. For example, researchers at Ferdowsi University of Mashhad and Shahrood University of Technology published a paper in 2019 along with a colleague at a British university aimed at improving UAV engine performance.^[7] As another example, Mehrabi has served as an assistant professor and member of the scientific committee at the IRGC-run Imam Hussein University, where he has collaborated on aerospace research with students and faculty.^[8]

The industry is further supported by seemingly countless and shifting procurement agents and front companies that import components from abroad, usually then funneling them directly to state-owned companies. An example is Pardazan System Namad Arman (PASNA), which changed its trade name to Feraz Tejarat Ertebat Company in 2018 after the U.S. Department of the Treasury added it to its Specially Designated Nationals and Blocked Persons (SDN) List.^[9] PASNA is a major supplier of electronic parts with military applications to the state-owned Electronic Components Industries (ECI). It operates front companies in Iran, Malaysia, and Singapore, which it uses to source electronics from east Asia and beyond.^[10]

Finally, the role of knowledge-based private companies in this ecosystem is becoming increasingly clear. These are not mere procurement agents or front companies, although some of them may have initially established themselves in that role. Rather, they are firms with substantial human capital and technical expertise. Some have backdoor connections to the IRGC, but by and large their ownership and management seem to belong to private citizens. Their efforts have mostly centered on producing components and offering R&D services. Some, but not all, have been sanctioned by the United States and the European Union.

Knowledge-based Companies' Role in Iranian Drones
 

The Islamic Republic has long prioritized achieving self-reliance in matters of national defense, an urge driven by its relative isolation during the war against Iraq in the 1980s.^[11] Drones are no exception in this regard. This is not to say that Iran has achieved such independence. An examination of the wreckage of several Iranian drones launched by the Russian military and recovered in Ukraine in 2022 revealed that they were "made almost exclusively of components produced by companies based in Asia, Europe, and the United States."^[12]

Still, Iran has made significant progress in the domestic production of key components, beginning with engines.

Engines: Mado Company, Aseman Pishraneh, and Farzanegan Propulsion Systems

Oje Parvaz Mado Nafar Company (Mado Company) is an illustrative example of a knowledge-based company working on Iranian drones.^[13] It was established in Iran in 2013 by Yousef Aboutalebi and several of his family members.^[14] Abdollah Mehrabi, the IRGC general, was the first chairman of the company's board of directors and also held an ownership stake.^[15]

Aboutalebi and his associates may have started out simply as procurement agents helping import engines from abroad, but, according to Aboutalebi himself, they began working on reverse engineering a Western-made engine at least as early as 2007.^[16] Since then, the company has copied a number of piston and Wankel engine designs and has become the primary supplier of engines for Shahed-series one-way attack UAVs.^[17]

An MD-550 engine made by Oje Parvaz Mado Nafar Company on display at an aerospace exhibition in Iran in October 2014. Credit: Uskowi on Iran website.

Mado Company's connections to China likely facilitated the import of Western-made engines to Iran initially. Later, however, those same connections may have become a means by which to sell Mado engines on the international market. Aboutalebi registered two trading companies in Hong Kong in 2013 and a third in mainland China in 2014.^[18] All three companies were dissolved by 2019, but a China-based company called Beijing Micropilot UAV Flight Control Systems continues to sell engines on Mado Company's behalf to any buyer willing to part with about $18,000.^[19]

Larger Iranian drones such as the Shahed-129 and Mohajer-6 have mostly relied on the Rotax 912 (or the turbocharged 914 variant), a four-cylinder engine built by the Austrian company BRP-Powertrain. To date, no Iranian company is known to have domestically reproduced the engine. But there is at least one private company, Aseman Pishraneh Engineering Services, that has extensive experience with it. Founded before 2003, Aseman Pishraneh is a subsidiary of Paravar Pars (discussed below). It offers repair, overhaul, and training services for Rotax-brand engines including the 912 and 914.^[20] These activities facilitate the accumulation of tacit knowledge that would provide a solid foundation for a reverse-engineering effort.

Jet engines, which are more advanced than their piston-driven counterparts, have not seen very widespread use in Iranian drones, though they are used in Iranian cruise missiles. Such engines have so far been the exclusive remit of state-owned companies like the Aero Engines Design and Manufacturing Company (DAMA) and its predecessor Turbine Engineering Manufacturing. But there is evidence of a growing knowledge base in the private sector for miniaturized jet engines. For example, Farzanegan Propulsion Systems Design Bureau has designed and prototyped turbojet engines that could potentially be used in small UAVs.^[21] The company's head engineer, Hossein Pourfarzaneh, had previously been the managing director of DAMA before helping establish Farzanegan Propulsion in 2016 (he now works in the aviation division of MAPNA Group). According to the National Council of Resistance of Iran, Pourfarzaneh led a delegation to North Korea in 2009 for training on the production of cruise missiles.^[22] Although there is no other evidence to substantiate the North Korea claim, Pourfarzaneh has worked abroad in China, Russia, and Sweden by his own admission.^[23]

Mechanical Parts: Sarmad Electronic Sepahan and Rayan Roshd Afzar

Iranian companies have not limited themselves to supplying engines. For example, Sarmad Electronic Sepahan Company specializes in the design and manufacture of navigation and avionics equipment for UAVs.^[24] It has produced servomotors and flowmeters copied from Japanese-origin parts, and these copies have been found in Mohajer-6 and Shahed-131 UAVs, respectively.^[25] Although the incorporation of Sarmad parts into Iran's military drones may have begun only in the last few years,^[26] the company was established in the 1990s.^[27] It is owned and run by three members of the Movahed Abtahi family.

A servomotor and flow meter produced by Sarmad Electronic Sepahan, recovered from UAVs in Ukraine. Credit: Conflict Armament Research

In July 2017, the U.S. Treasury identified Rayan Roshd Afzar as a company that "has produced technical components" for the IRGC's drones.^[28] Reportedly established in 2001,^[29] Rayan Roshd Afzar sells a variety of optical equipment with military applications, making it perhaps a competitor or a supplier of the state-owned Sairan Electro-Optic Industries (formerly known as Isfahan Optic Industries). According to an archived version of its website, Rayan Roshd Afzar products include electro-optical sensors specifically made for UAVs.^[30]

Rayan Roshd Afzar is majority-owned by the Iran-based Rayan Fan Kav Andish Company. The remaining shares are divided among five individuals: Seyed Reza Ghasemi, Farshad Hakemzadeh, Ali Homaie, Mohsen Parsajam, and Jalal Rohollahnejad. Several of those individuals also hold shares in Rayan Fan Kav Andish,^[31] which itself owns several other companies, including Rayan Pardazesh Pezhvak Company, Rayan Laser Test Company, and Rayan Electronic Farda Company. Some of those companies also produce UAV components.

Like Mado Company, Rayan Roshd Afzar has substantial ties to China, and it is not entirely clear which of its products are produced domestically and which are sourced from abroad. The United States has identified Rohollahnejad and the China-based Wuhan IRCEN Technology Co., Ltd., where he served as executive director, as involved in the procurement of goods on behalf of Rayan Roshd Afzar.^[32] Further, the U.S. Treasury has stated that Parsajam and Hakemzadeh have obtained dual-use items from China on behalf of Rayan Roshd Afzar.^[33] Both have held ownership stakes, along with the Chinese national Emily Liu (Liu Bao Xia), in several Chinese companies, including Raybeam Optronics Co. Ltd. and Abascience Tech Co. Ltd. (Sunway Tech Co. Ltd.).^[34] These China connections may facilitate more than the procurement of components, however; it is possible that they serve as an avenue for the Iranian Rayan companies to benefit from Chinese R&D and technical expertise.

Straddling the Civilian-Military Divide: Baharestan Kish and Paravar Pars

Baharestan Kish Company has manufactured UAVs and "was working on" Shahed UAV components as of 2021, according to the U.S. Treasury.^[35] Open sources reveal little else about the company's activities, but it has connections to the IRGC. A press report in 2015 asserted that the IRGC Cooperative Foundation (Bonyad Taavon Sepah) was among Baharestan Kish's shareholders, and corporate documents show that several of the companies represented on its board of directors count the IRGC Cooperative Foundation among their shareholders.^[36] Further, a former chairman of Baharestan Kish's board of directors, Abulfazl Salehnejad, is an IRGC commander who served as deputy commander for industrial research in the IRGC SSJO.^[37] And Baharestan Kish appears to have connections to Saberin Kish Company, which the U.S. Treasury has labeled "IRGC-owned."^[38] Still, its managing director Rahmatollah Heidari seems to be a businessman with connections to several other companies in various industries.

Paravar Pars Company has served Iran's military industries in numerous ways, including work related to drones. Officially established in 1992, its headquarters are located at the Sepehr Airport in east Tehran, adjacent to the IRGC-run Imam Hussein University. The National Council of Resistance of Iran has asserted that Paravar Pars "belongs to the Aviation Research Unit" of Imam Hussein University and that it "has been placed under the control of the IRGC Aerospace Force since 2005."^[39] The chairman of the company's board of directors is Alireza Tangsiri, the commander of the IRGC Navy, and Mohsen Asadi, a former managing director and current board member, is a member of Imam Hussein University's scientific committee.^[40] Hamid Aslani, also a high-ranking IRGC commander, was previously chairman of the board,^[41] and Salehnejad—the former chairman of Baharestan Kish—was also previously a board member, representing the IRGC SSJO in that capacity. Given these extensive connections to the IRGC, it is debatable whether Paravar Pars can truly be considered a private company; but, similar to Baharestan Kish, it seems to straddle the line as a privately-run entity with some level of IRGC backing.

A network map showing entities connected to Paravar Pars Company. Credit: Wisconsin Project

In any case, Paravar Pars's drone-related work runs the gamut. It produces the Oghab hand-launched UAV,^[42] which is identical to a reconnaissance drone that Qods Aviation Industries has marketed for export under the name Bina.^[43] Moreover, according to the U.S. Treasury, the company was involved in the research, development, and production of the Shahed-171 UAV for the IRGC Aerospace Force and has been involved in efforts to reverse engineer Israeli- and American-made models.^[44] The company also houses the Sepehr Aviation Research Center, whose researchers have published academic work on UAV simulation and autopilot design.^[45]

Other Industry Players: Bespar Sazeh Composite and Kimia Part Sivan

The National Council of Resistance of Iran asserts that Bespar Sazeh Composite Company manufactures UAV airframe parts, including for Mohajer-series drones.^[46] Such an assertion is plausible, as the company was originally located next door to Qods Aviation Industries in an industrial area along the Lashgari Expressway near Mehrabad airport, where several other aircraft parts manufacturers are located. Moreover, the company's website indicates that it is equipped to supply metal and composite parts for the aviation industry, among other industries.^[47] Mohammadreza Khosrojerdi and Masoumeh Kakavand founded Bespar Sazeh Composite in 2014 and still apparently run it.

Finally, Kimia Part Sivan Company (KIPAS), established in 2011, could be considered a knowledge-based company working on UAVs. Although it purportedly specializes in the manufacture of fiberglass products for civilian applications, according to the U.S. Treasury, KIPAS has supplied the IRGC Qods Force with drone components sourced from abroad, conducted drone flight tests, and provided technical assistance to the IRGC.^[48] The claim about "technical assistance" in particular suggests a level of human capital exceeding that which a run-of-the-mill procurement company might have to offer. Its publicly available business records reveal no overt connections to the military or to state-owned enterprises, however.

New Entrants?
 

Beyond the companies whose roles have been well-established in open sources, Iranian corporate records reveal a network of recent entrants apparently positioning themselves to claim a portion of the now-booming drone business. Some of these companies are newly established, while others are shifting their focus to drone-related work. These companies, and the individuals behind them, may also be aiming to benefit from the newfound reliance of Russia on Iranian-designed drones.

Perhaps the most notable company within the network is Bonyan Danesh Shargh, a company that has previously been involved in Iran's space program and that has a track record of cooperation with Russian entities. In 2015, it inked an agreement with the Russia-based companies VNII Electromekhaniki and BARL Research and Production Corporation on the development, creation, and operation of a remote-sensing satellite.^[49] That satellite was launched from Russia in August 2022, and Bonyan Danesh Shargh is reportedly responsible for its in-orbit operation.^[50] Further back, in 2011, the company reportedly signed a contract with a Russian company to deliver Orion-12 "ekranoplan" amphibious military transport aircraft to Iran.^[51]

Although it was established in 1996, Bonyan Danesh Shargh has much more recently positioned itself to get into the drone business. In July 2023, it issued a public notice indicating that its company activities would now include "the production of unmanned aerial vehicles (UAVs) and quadcopters, and production of other unmanned vehicles."

A gambit by Bonyan Danesh Shargh to get into the military drone business is coherent given that its two key officials, Abbas Abdi Asjerd and Seyed Mohsen Vahab Zadeh Moghadam, have a connection to Abdollah Mehrabi, who heads the IRGC Aerospace Force SSJO. Mehrabi, Asjerd, and Moghadam all hold shares in another company called Baran Sazan Caspian—putatively involved in water supply and cloud seeding but also authorized for imports and exports. Like Bonyan Danesh Shargh, Mehrabi has links to Russia: He is reported to have helped establish a drone production facility for Shahed-series UAVs in Russia's Alabuga Special Economic Zone.^[52]

A network map showing entities connected to Abdollah Mehrabi, Seyyed Mohsen Vahabzadeh Moghadam, and Abbas Abdi Asjerd. Credit: Wisconsin Project

Asjerd and Moghadam have embarked on a drone start-up spree, opening at least three new companies with drone ambitions in the last 18 months: Alvand Motorbuilding Industries Company, Pishro Sanat Aseman Sharif Company, and Moj Gostar Aseman Parvaz Company. All three were officially established in August 2022 or later, are authorized to conduct business related to UAVs or their components, and have a board of directors under the control of Asjerd and Moghadam.

Based on the information available, however, it is not possible to say conclusively that the network of companies led by Asjerd and Moghadam is actively supporting Iran's military drone industry. Perhaps their stated interest in UAVs is still aspirational, or perhaps they are interested in drones with civil applications. But the corporate registration bonanza, connection to Abdollah Mehrabi, and existing contacts with Russia point to the possibility that Asjerd and Moghadam seek to tap into the booming military drone business, possibly including exports or the provision of services to Russia.

Conclusion
 

In November, Deputy Defense Minister Farahi stated that Iran's arms exports reached nearly $1 billion in the Persian year 1401 (March 2022 to March 2023). Although this statistic may be exaggerated, data from the Stockholm International Peace Research Institute (SIPRI) and press reportage indicate that Iran's defense exports swelled in 2023, driven largely by drones.^[53] These figures do not account for demand coming from Iran's own armed forces.

The full implications of this lucrative market drawing the private sector into Iran's drone industry are not yet clear, but one consequence concerns the effectiveness of supply-side controls in inhibiting Iran's drone industry. Experts have acknowledged that export controls face inherent limits when it comes to drones because many of the components found in Iranian drones are commercial grade and ubiquitous on the international market.^[54] The growth of a domestic, knowledge-intensive industry that is capable of substituting or replicating complex parts—as Sarmad Electronic did with Japanese servomotors—complicates the picture further by driving down the level of items Iran procures abroad to more basic, harder-to-control inputs such as electronic chips.^[55]

The growth of private knowledge-based companies may also complicate the use of targeted sanctions to slow Iran's drone progress, given the difficulties in confirming the connection between the companies and Iran's military. Where private companies have connections to the IRGC, it is in many cases through their ownership and board of directors and can be multiple degrees removed. This information is not always easy to ascertain, and so these companies may be able to operate freely for some time before attracting the attention of sanctioning authorities.

A final question is whether the robust private sector involvement is unique to the drone industry. Is the private sector's role in drone development a function of the relatively low-tech nature of the product? Or could Iran's more high-tech missile, space, or nuclear programs also tap private sector expertise as well?

There is some evidence suggesting that such investment is already beginning to take place. For example, the Kowsar imaging satellite unveiled in 2022 was reportedly built by a consortium of eight private companies. A government official stated at the time of the satellite's unveiling that the government supported the entry of private companies into the space-launch business, too.^[56] Similarly, the U.S. Treasury sanctioned a private company, Fanavaran Sanat Ertebatat Company, in October 2023 for producing jam-resistant guidance systems for the IRGC Aerospace Force SSJO, likely for use in missiles.^[57]