Correct, Chinese drones are just cheap, they are not anywhere close to being the best. They are perfect for small militant groups and small countries that don't want to shell out for expensive NATO standard equipment. Almost all their weapons are reverse engineered copies of either western or russian equipment, so obviously they can never match that.
You are also right about that Rustom 2, it's a horror. Propeller driven, slow and it's not even a combat drone, it's mainly a surveillance drone. You could fit some light weapons on to it with some work, but it will never be good at combat and thus can never be called a combat drone. They will most probably use it for simple tasks like monitoring the loc and militant camps, flying at a very high altitude. Now it would be far fetched to say we cannot build a jet engine combat drone. A country that can send heavy rockets to space, probes to moon and mars and build indigenous combat helicopters and jets can definitely build a jet engine drone. India is actually one of the only countries that can build an actual jet engine, apart from Russia, US and UK. The Kaveri engine will power our next UAVs. It could not be used on our jets since it's thrust was 90kn as opposed to the required 100kn, but it will be more than enough for a UAV. But yes,i expect nothing good out of DRDO. These public sector enterprises can almost never produce anything good in time since they have no accountability. They are lazy and incompetent. The only hope is the private sector. But for now and the next 10 years, we will keep importing Israeli drones.