In 1938, the Ministerio del Aire rejected Breda's proposal for a Ba.65 floatplane derivative and denied export permission. Nonetheless, design work on a Ba.65 floatplane continued in secret at the Milan factory. The result was the Ba.65 Idro concept which incorporated the tail surfaces of the Breda's twin-engined Ba.88 Lince.
In theory, the Ba.65 Idro was to replace the unsatisfactory Ba.64I prototype. In reality, the Ba.65 Idro represented part of Breda's export ambitions for the Ba.65 and Ba.88 series. The Ba.65 Idro was to be offered with the same range of engines as other Ba.65s but an advanced version would feature the 1,000 hp Piaggio P.XI RC.40 radial from the Ba.88.
Rather than submit the Ba.65 Idro to the Regia Aeronautica, Breda hope to gain permission from the Ministerio del Aire to enter the design in a Danish 2-seat floatplane competiton. The Ba.65 Idro (Dan) would be offered with 900 hp Isotta-Fraschini K 14s and open rear gun position or 1,000 hp Piaggio P.XI with an enclosed Breda M turret for rear defence.
In the end, the Ministerio del Aire again denied export permission and insisted upon Breda focusing on correcting defects in the Ba.88 design for the Regia Aeronautica. As a result, Breda plans for float versions of the Ba.65 and Ba.88 never got past the drawing board.