The Finnish Air Force received the first of its 13 Gnats on 30 July 1958. It was soon found to be a problematic aircraft in service and required a lot of ground maintenance. In early 1957 a licence agreement was reached to allow Valmet to build the Gnat at Tampere in Finland, although in the end none were built. On 31 July 1958, the Finnish Air Force Major Lauri Pekuri broke the sound barrier for the first time in Finland at Lake Luonetjärvi with a Folland Gnat.
All Gnats were grounded on 26 August 1958 for six months after the destruction of GN-102 due to a technical error, and the aircraft soon became the subject of severe criticism. Three other aircraft were also destroyed in other accidents. The Gnats were removed from active service in 1972 when the Häme Wing moved to Rovaniemi, and when the new Saab 35 Drakens were taken into use.
The first 13 aircraft for the Indian Air Force were assembled at Hamble-le-Rice, they were followed by partly completed aircraft and then sub-assemblies as Hindustan Aircraft slowly took over first assembly, and then production of the aircraft.
The first flight of an Indian Air Force Gnat was in the United Kingdom on 11 January 1958, it was delivered to India in the hold of a C-119, and accepted by the Air Force on 30 January 1958. The first Gnat squadron was the No. 23 (Cheetah), which converted from Vampire FB.52 on 18 March 1960 using six Folland-built Gnats. The first aircraft built from Indian-built parts first flew in May 1962. The last Indian-built Gnat F.1 was delivered on 31 January 1974.
Indo-Pakistani War of 1965
Serving primarily with the Indian Air Force, the Gnat is credited by many independent and Indian sources as having shot down seven Pakistani Canadair Sabres in the 1965 war. The Pakistan Air Force (PAF) claims only three Gnat victories over F-86s in air-to-air combat, while two Gnats were downed by PAF fighters. During the initial phase of the 1965 war, an IAF Gnat, piloted by Squadron Leader Brij Pal Singh Sikand, claimed to mistakenly land at an abandoned Pakistani airstrip at Pasrur and was captured by the PAF. Two Lockheed F-104 Starfighters claimed to have forced the Gnat down. This Gnat is displayed as a war trophy in the Pakistan Air Force Museum, Karachi.
After the ceasefire, one Pakistani Cessna O-1 was shot down on 16 December 1965 by a Gnat.
Indo-Pakistani War of 1971.
The Gnats were used again by India in the Indo-Pakistani War of 1971 against Pakistan. The most notable action was the Battle of Boyra where the first dogfights over East Pakistan (Bangladesh) took place. The IAF Gnats downed two PAF Canadair Sabres in minutes and badly damaged one. The Pakistan Air Force claims that one Gnat was shot down, which was proved incorrect. Another notable dogfight involving a Gnat was over Srinagar airfield where a lone Indian pilot held out against six Sabres, scoring hits on two of the Sabres in the process, before being shot down. Gnat pilot Nirmal Jit Singh Sekhon was posthumously honoured with Param Vir Chakra (India's highest gallantry award), becoming the only member of the IAF to be given the award.
By the end of 1971, the Gnat proved to be a frustrating opponent for the larger, heavier and older Sabre. The Gnat was referred to as a "Sabre Slayer" by the Indian Air Force since most of its combat "kills" during the two wars were against Sabres. The Canadair Sabre Mk 6 was widely regarded as the best dogfighter of its era. Tactics called for Gnats taking on the Sabres in the vertical arena, where the Sabres were at a disadvantage. Moreover, because the Gnat was lightweight and compact in shape, it was hard to see, especially at the low levels where most of the dogfights took place. Apart from air defence operations, the aircraft performed multiple roles in the Bangladesh Liberation War, being used in anti-shipping operations, ground attack, bomber/transport escort and close air support with devastating effects on the PAF.
The IAF was impressed by the Gnat's performance in the two wars, but the aircraft had problems including hydraulics and unreliable control systems. To address these issues, the IAF issued a requirement for an improved "Gnat II" in 1972, at first specifying that the new version was to be optimized as an interceptor, but then expanding the specification to include the ground-attack role. Over 175 of the Hindustan Aeronautics Limited-built licenced version, the Ajeet ("Unconquerable"), were produced in Bangalore.
Gnats served in India from 1958–78, and several remain in use in private hands. Some IAF Gnats, one of which had participated in the 1971 war in East Pakistan (present day Bangladesh), were presented to the Bangladesh Air Force.