Defence Start-ups turn India’s new vanguard

Three indian institute of Technology (IIT) Bombay students, Ankit Mehta, Rahul Singh, and Ashish Bhat, founded ideaForge Technology in 2007.

A year later, after the start-up won top honours in a competition alongside the Massachusetts Institute of Technology in the US, defence laboratories in India approached it for autopilots, which serve as the brains of unmanned aerial vehicles.

“We delivered the world’s smallest and lightest autopilot at the time, marking the start of our collaboration with government labs,” says Mehta.

IdeaForge’s fixed wing (SWITCH) and quad platform (NETRA) series of drones were pressed into service in Operation Sindoor, which India launched in May to target terrorist infrastructure in Pakistan in response to the April 22 shooting that left 26 tourists dead in Pahalgam in Kashmir. What stood out wasn’t just the precision of the strikes, but the technology that powered them.

The operation also underscored a fundamental shift: Indian defence-tech start-ups, which number around 1,000, are now becoming big players in key areas of the country’s defence right from artificial intelligence (AI)-enabled surveillance and satellite imagery to indigenous drones.

Davinder Sandhu, Co-Founder & Chair of consultancy firm Primus Partners India, says India’s defence-tech sector is shifting from a PSU-led model to one where start-ups are crucial drivers of innovation, agility, and strategic autonomy. “These start-ups are developing advanced technologies—from AI-driven drones to smart soldier systems—delivering rapid, indigenous solutions that reduce import dependence and strengthen India’s defence capabilities.”

Alongside ideaForge Technology, start-ups such as IG Drones and NewSpace Research and Technologies were instrumental in providing real-time reconnaissance and unmanned support to the armed forces in Operation Sindoor. Once seen as peripheral innovators, these ventures are now deeply embedded in India’s military value chain, the mission demonstrated.

Many of these start-ups owe their existence, at least partly, to government programmes such as iDEX (Ideas for Defence Excellence) and ADITI (Acing Development of Innovative Technologies with iDEX) that are actively nurturing dual-use (military and civilian) technologies. India’s defence-tech start-up ecosystem is not just innovating at speed, it’s helping rewrite the national security playbook.

Major General (Retd) Ramesh Chandra Padhi, who served in the Indian Army for 36 years and is the Senior Vice President of IG Drones, says Indian start-ups have a critical role in modernising defence infrastructure. “Start-ups in India can bridge the technology gap by delivering today’s technology—not yesterday’s,” he says.

To be sure, the Defence Research and Development Organisation (DRDO) remains the primary agency for military research and development (R&D). Padhi, however notes that the organisation’s processes are often snagged by bureaucratic red tape.

“Of course, high-end platforms like hypersonic or supersonic missiles, heavy military aircraft, advanced tanks, submarines and fifth-generation fighter jets will still need to be developed by the government or defence PSUs,” he explains. These require massive capital and scale, which the private sector, as of today, does not have, he adds.

But start-ups can significantly accelerate innovation and plug operational gaps more efficiently in areas such as drones, surveillance systems, AI-based intelligence, and rapid prototyping, says Padhi.

New Backbone

Proving the point is Pixxel, another start-up in Indian space tech, founded by BITS Pilani alumni Awais Ahmed and Kshitij Khandelwal in 2019.

Ahmed says from developing a modular 150 kg satellite capable of integrating diverse payloads—optical, synthetic aperture radar, infrared, and hyperspectral cameras—for defence applications like missile launch detection, border surveillance, and troop-movement tracking beyond satellites, Pixxel has also secured contracts to build specialised hyperspectral and infrared cameras, strengthening India’s space-based defence capabilities.

One of the critical factors behind the trend has been the role of the government. iDEX was launched with a budgetary support of Rs 498.78 crore for a period of five years from 2021-22 to 2025-26 as part of a programme to provide financial support to nearly 300 start-ups.

Simultaneously, India has in recent years emerged as a major defence manufacturing hub, driven by the Make in India initiative to push local manufacturing and a strong bid for self-reliance.

According to official figures, in FY24, indigenous defence production reached a record Rs 1.27 lakh crore. Exports soared to Rs 23,622 crore in FY25, a 34-fold increase from FY14. Finance Minister Nirmala Sitharaman, in the Union Budget this year, increased defence spending from Rs 6.2 lakh crore last year to Rs 6.8 lakh crore.

Even so, there has been a lag between Requests for Information, the formal gathering of information from potential providers of defence goods and services, and requests for proposal, documents that push the process of buying goods and services further; they typically are a statement of requirements to be met by prospective respondents wishing to make a bid for such supplies.

Short Conflict, Lasting Impact

Although India has multi-dimensional capabilities, the country’s arsenal of drones may have proven deficient had Operation Sindoor escalated, according to ideaForge’s Mehta, who blames this on lack of consistent demand.

“This was a small conflict compared to what’s happening globally. In today’s war scenarios, if your industry isn’t aligned—or production can’t match the rate of consumption in an entrenched war—it becomes extremely difficult. A protracted engagement will deplete your resources faster than anything,” says Mehta.

At a time when countries like the US and China are racing ahead in tech-driven warfare, India cannot afford to lag behind, warns Padhi.

“If we are not self-reliant in defence, what will happen in times of crisis?” he asks, underlining the urgency of accelerating indigenous capabilities. “The core issue is, who will share cutting-edge technology with us? Only friendly nations might, and even among them, very few actually possess the best technologies.”

His point underscores the strategic imperative for India to build its own defence-tech backbone.  

Entry Barriers

Barriers to entry in India’s defence-tech ecosystem are steep, says Ahmed, pointing to the challenges start-ups face in securing early-stage funding. On the one hand, government participation at the initial stages of fund-raising is limited, and on the other, raising private capital for defence-oriented ventures is far from easy.

This combination makes it difficult for young companies to scale up quickly or take bold bets in a sector that demands both patience and heavy investment.

The speed at which government contracts are being allocated is accelerating and budgets are expanding, but there is always room for improvement, says Abhishek Prasad, Managing Partner at Cornerstone Ventures, which has invested in defence start-ups like NewSpace Research and Technologies.

“In the last Budget, almost Rs 1.5 lakh crore was reserved for new equipment and modernisation of the defence sector. Therefore, the total addressable market is rather large,” adds Prasad.

As India looks to strengthen its defence-tech landscape, fostering a culture of public-private collaboration with start-ups could be the key to scaling up innovation and reducing strategic dependence on foreign technologies, say experts.

Just a decade ago, for instance, China’s defence and space capabilities were almost entirely government-driven, with little or no private sector involvement. But over the past 10 years, that has changed dramatically. By opening up the ecosystem to private entities, China has experienced a surge in start-ups working in critical areas such as air defence and space technology.

“If we hope to catch up with China, or even the US, India needs far more than just ISRO or DRDO leading the charge,” says Ahmed. “We need at least 50 private companies and organisations working in tandem with these institutions. It can’t be a government-only effort,” he adds. ISRO is short for the Indian Space Research Organisation.

Nation Building

Ahmed points to the US model of “American Dynamism”—a term used to describe venture capital investments in start-ups that support national interest, including aerospace, defence, public safety and education. “It’s a powerful example of how enabling start-ups can help build for the nation,” he says.

Prasad says the defence-tech start-up community has moved up in the past three to five years, but it is still struggling for capital, which is more easily accessible in more mature markets.

“There are often challenges in attracting capital from larger global funds,” he says, noting that some funds have restrictions in terms of what they can invest in. “Therefore, there is a need for late-stage capital availability in the defence sector,” Prasad says.

@PalakAgarwal64