Philip Finnegan, director of corporate analysis at Teal Group, an aerospace consulting firm based in Fairfax, Virginia, said he expected the 2014 U.S. budget to propose reductions in existing drone programs in favor of “next generation systems, stealthier, with more power, and capable of operating autonomously if jammed by opponents.” Among major competitors to the U.S. drone makers, Mr. Finnegan lists Israeli companies — in some cases working with Indian partners — and Brazilian programs aimed at that country’s need to patrol far-flung jungle borders and a long Atlantic coastline. Also emerging as future competitors, in Mr. Finnegan’s view, are Turkish Aerospace Industries; Denel, the South African state-owned aerospace and defense technology group; and some Chinese companies.

Yet while this is an industry waiting to take off, until the Federal Aviation Administration sorts out the rules of the air for unmanned vehicles it will remain idling on the runway, because for now commercial flights are banned. Congress has asked the FAA to write regulations governing civil operation of small unmanned aircraft systems in the national airspace by 2015. It’s not clear whether the agency will meet that deadline or not. “There’s just too much uncertainty,” said Phil Finnegan, director of corporate analysis at the Teal Group, which monitors the aerospace industry. “There will be applications when the FAA opens up the airspace. The first one will be law enforcement, then civilian. But for now, they cannot fly freely in airspace.”

Chris Calabrese, legislative counsel for the American Civil Liberties Union, called the FAA's announcement a good first step. "It's a smart start to this to use the test phase to also test what works best to protect privacy," he said. The U.S. still needs to regulate drone use by law enforcement, Calabrese said. The global market for drones will grow to $11.4 billion in 2022 from $6.6 billion this year, according to Teal Group Corp. of Fairfax, Virginia, which analyzes the industry. Major drone makers include Northrop Grumman Corp., General Atomics Aeronautical Systems Inc., and Aerovironment Inc., which make most sales to the U.S. military, said Steve Zaloga, a Teal Group analyst.

But the mini drones are far more common, making up about 75 percent of the military’s pilotless planes. They are cheaper to build, easier to use, and popular with the ground troops because they have saved hundreds of lives, said Steven Zaloga, a senior analyst with the Teal Group Corp., a defense consulting firm in Fairfax. Aiding their proliferation is the Pentagon’s decision to give millions of dollars to the commands overseas to spend on their most pressing wartime needs without going through the time-consuming purchasing bureaucracy, Zaloga said. Getting rid of the red tape opened the flood gates for small firms. “These mini drones gave the people with their boots on the ground mini-intelligence systems, which in turn spurred more demand,” Zaloga said. “Drones are no longer just for the general sitting in his Pentagon office.”