The Capital Push Powering India's Defence-Tech Leap
India's defence-tech landscape is undergoing a revolution, driven by a mix of policy liberalisation, heightened geopolitical urgency, and an emerging breed of deeptech startups.
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India's defence-tech landscape is undergoing a revolution, driven by a mix of policy liberalisation, heightened geopolitical urgency, and an emerging breed of deeptech startups.
Since 2020, the Indian government has actively encouraged domestic innovation in critical technologies through initiatives such as the Defence Acquisition Procedure (DAP) 2020 and the iDEX (Innovations for Defence Excellence) framework. These are aimed at reducing India's reliance on imports, which still account for around 36 per cent of India's total defence procurement, according to SIPRI data as of 2023.
Venture capital firms like Speciale Invest have seized the moment. "We saw a generational opportunity," says Vishesh Rajaram, pointing to a strategic shift where private capital is beginning to back first-principles engineering in a sector historically dominated by government labs and public sector undertakings.
Startups such as GalaxEye Space. QNu Labs, Astrogate Labs, and Kawa Space are technologies that previously lacked domestic equivalents. Startups like these are not only aligning with India's Indigenisation List (MoD, 2023) but are also exploring dual-use commercial applications across telecommunications, logistics, and energy.
"At Speciale Invest, we invested early on India's defence-tech sector because we saw a generational opportunity, one where innovation is not just encouraged, but imperative. The convergence of deeptech capabilities in AI, autonomy, space, and advanced manufacturing, combined with a supportive policy environment, convinced us that India was ready to build mission-critical technologies from first principles," said Rajaram.
Navigating defence's characteristically long development and procurement cycles, which often stretch more than half a decade, remains a hurdle. Yet, according to the Ministry of Defence's iDEX progress report, over 150 contracts have been signed with startups since its inception, signalling an unprecedented openness to private-sector innovation.
Rajaram said, "Navigating long sales cycles and regulatory complexity requires patience, strategic alignment with defence end-users, and partnering with founders who understand the unique duality of this sector, where innovation must meet both operational reliability and sovereign requirements."
Looking ahead, India's ambitions are global. The Ministry of Defence has set a target to increase defence exports to INR 35,000 crore (~USD 4.2 billion) by 2025, up from INR 15,920 crore in 2023. As Rajaram observes, India is poised to become a net exporter of cutting-edge technologies, particularly in Positioning, Navigation, and Timing (PNT), ISR (Intelligence, Surveillance, Reconnaissance) systems, and drone warfare, areas that are increasingly vital in both conventional and hybrid conflict scenarios.
"The current geopolitical climate has accelerated demand for indigenous solutions, and we believe Indian startups will not only serve the domestic market but also become key players in allied export corridors," noted Rajaram.
The evolving geopolitical landscape, from border tensions with China to maritime rivalries in the Indo-Pacific, has only intensified the need for self-reliance and export-oriented innovation.
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