InDepth | Battle-Tested, Homegrown and Ready to Scale: Can Indian Defence Tech Start-Ups Go the Distance?

For years, Ankit Mehta carried a vivid memory of the 26/11 attacks in Mumbai. He watched naval helicopters helplessly try to peer inside hotel windows during the attack and realised that India-built drones could have changed everything.

However, for nearly two decades, homegrown drone technology, which Mehta’s company ideaForge makes, was not taken seriously. “The system treated us like a science-fair project,” recalled Mehta in an interview with a TV channel.

“We were told domestic deep tech wasn’t ‘battle-ready’,” Mehta said. “We faced polite scepticism. We would bring our autonomous systems to high-altitude trials, prove they could fly in sub-zero temperatures, and yet we’d leave with nothing but a pat on the back.”

Then came May 7, 2025, when Indian military launched Operation Sindoor in response to a terror attack in Kashmir’s Pahalgam, which left 26 civilians dead.

Unlike an ordinary confrontation, this was a carefully orchestrated strike. Most importantly, this was a high-tech battle, where India-made systems, both by state-run companies and start-ups, played a vital role.

This was the exact moment when the perception towards defence-tech start-ups shifted and the ripples reached far beyond the armed forces. Zuppa founder Sai Pattabiram can attest to this. His start-up secured fresh funding and watched its order book surge tenfold soon after the conflict. “Before Operation Sindoor, investors were hesitant to take a bet on us,” Pattabiram recalls. “After the operation, we started seeing much stronger interest.”

This shift echoed across India’s nascent defence-tech industry. For years, founders fought the perception that military tech was a gamble defined by gruelling long sales cycles, bureaucratic red tape and intense capital requirements.

Sindoor flipped that equation. It underscored the need for drones, counter-drone systems, precision weapons, AI and electronic warfare, and networked intelligence.

“We now need systems that can evolve very rapidly and start-ups are the best way of expressing that capability,” points out Mehta. “They can move faster, iterate faster and bring technology to the field faster.”

This realisation reverberated across the armed forces, policymakers and venture funds. Technologies previously dismissed as high-risk and long-term bets suddenly were deemed vital for national security.

“Operation Sindoor made the need for sovereign defence technology very clear,” says Manu Iyer, co-founder and general partner at Bluehill VC, which invests in early-stage deep-tech and frontier technologies.

Numbers back the positive investor sentiment. Funding into Indian defence-tech start-ups more than doubled to $282.5mn in 2025, from $135.2mn in 2024, according to data platform Tracxn. Sindoor seems to have provided the sense of urgency that was long missing in the system.

The Trojan Components

Two years ago, it was just another day in Beirut. As ordinary a day could be for the ancient city that has had a rough few decades embroiled in the conflicts of West Asia.

But just as the clock struck 3:30pm on September 17, 2024, hundreds of pagers all around the city started beeping and then exploded.

It later surfaced that attackers had planted explosives into the pagers and turned them into time bombs, making lethal weapons out of everyday communication tools.

Two years later, India discovered a variation of this vulnerability. In April 2026, the Delhi Police Special Cell uncovered an invisible dragnet operating near sensitive military bases across Punjab, Haryana, Rajasthan, and Jammu and Kashmir.

Commercially available, solar-powered Chinese CCTV cameras—fitted with active 4G SIM cards—were beaming data back across the border, effectively mapping India’s key defence installations in real time.

The lesson from both the episodes is identical: if critical hardware sits inside a foreign-controlled supply chain, national security is entirely at the mercy of an outsider.

In this regard, Operation Sindoor was an eye-opener for India, which was the world’s second-largest conventional weapons importer between 2021 and 2025, according to data from the Stockholm International Peace Research Institute.

The country has not only been buying conventional weapons like fighter jets and advanced missile batteries, but components too. And that is where the major vulnerability lies, say experts.

Importing components like flight controllers, precision sensors, microprocessors and rare-earth magnets puts India at major security risk as these markets are dominated by China. Take drones for example.

An Indian start-up can conceptualise, design and assemble an unmanned aerial vehicle (UAV) entirely locally. But if the system relies on an imported flight controller or foreign-made motor components, it’s not fully sovereign.

“A system can be Indian at the level of the brand and assembly line while remaining foreign at some of its most critical layers,” warns Iyer.

Ravi Kumar Gupta, a former scientist and director at the Defence Research and Development Organisation (DRDO), sums up the dilemma: “Either we import a complete system from worldwide suppliers or we import systems which are already developed elsewhere.”

The result is that India is always two or three generations behind, he adds. “These systems are already becoming obsolete by the time we acquire them. Nobody is focusing on this real problem.”

There cannot be dependence on foreign technologies when the same can be designed, built and innovated at home, pointed out former Chief of Defence Staff General Anil Chauhan in a lecture on the strike at the Vivekananda International Foundation, a policy think tank. “Operation Sindoor showcased why indigenously developed counter-UAS [unmanned aircraft systems], tailored for our terrain and missions, are indispensable,” he observed.

For India’s defence-tech start-ups, the objective is much larger than basic import substitution, say industry experts.

They should be capable of owning the intellectual property (IP), building insulated local supply chains and securing the software layers that keep weapons functional when the airwaves are jammed.

Building this sovereign capability is a race against the clock. This is exactly the issue that the government’s specialised start-up initiatives are finally beginning to fix.

Lowering Entry Barrier

Young start-up Raphe mPhibr embedded itself with DRDO a few years after it was founded. The start-up’s engineers worked with state scientists to build and test three distinct systems: payload-drop drones, highly complex swarm UAVs and precision-guided missile drones.

All three were deployed during Operation Sindoor, showcasing that a start-up can indeed deliver when it matters the most. This was exactly what policymakers had envisioned when Innovations for Defence Excellence (iDEX) was launched in 2018. This initiative supports start-ups developing defence and aerospace technologies by providing grants, mentorship and technical support.

Before the scheme, founders had to burn through a lot of cash just to build private laboratories, construct testing ranges and set up pilot assembly lines—all before they even had a single purchase order. Now, iDEX absorbs a chunk of the early-stage R&D risk while carving out a legitimate pathway into the military’s strict procurement pipelines. “iDEX has broken down the bureaucratic wall,” observes Bluehill’s Iyer.

The effort didn’t stop with iDEX. In 2020, the armed forces were told to evaluate India-made options for procurement before turning to foreign suppliers under the Defence Acquisition Procedure (DAP).

However, a successful prototype still didn’t guarantee a commercial contract. To plug this gap, DAP 2026 has been introduced. This allows government buyers to step up as true anchor customers. Under the policy, explicit technology readiness level (TRL) frameworks will map out years of guaranteed procurement from the prototype phase to mass manufacturing. It would also publish highly specific indigenisation lists backed by strict legal deadlines.

“This is the most serious attempt yet to fundamentally rewrite what a procurement officer is legally allowed to do,” says Pranav Pai, partner at VC firm 3one4 Capital.

Now, a successful iDEX or Technology Development Fund prototype can automatically trigger an immediate pilot order followed by five years of assured orders.

By the close of 2024–25, the government had inked contracts worth a massive ₹2.09 lakh crore with the domestic defence industry—awarding an impressive 81% of that total contract value to homegrown companies.

However, India still needs to reduce its military imports and master the art of inventing new technologies. And that pivots the spotlight directly back onto DRDO.

Passing the Baton

India has more than doubled its defence R&D budget between 2016–17 and 2026–27—to over ₹29,000cr from ₹13,500cr. Despite this, laboratory breakthroughs are not converting into deployable systems, say analysts.

The problem could be that for decades DRDO has been inventing and building everything, they add.

In contrast, the Defence Advanced Research Projects Agency (Darpa), an R&D platform under the Department of Defence in the US, acts as an elite talent scout. It funds high-risk, frontier technologies inside universities and start-ups. It bets on radical ideas that have zero immediate commercial market but possess the potential. “The real difference is that America runs a seamless continuum between grants, equity and procurement,” explains Pai.

Government agencies should shape and catalyse markets rather than compete with the private sector, he argues. “What DRDO has been doing concentrates all the risk in a single institution while starving the private ecosystem of both challenging problems and reliable revenue.”

India did attempt to mimic the Darpa model through agile initiatives like iDEX. However, these programmes routinely hit a wall because the responsibility for commercialising defence technology remains stuck inside the DRDO.

“The private sector kept pleading for a chance, but the bureaucratic pushback was always the same: military technology is too sensitive to trust with private corporations,” recalls Gupta.

Once a new system is tested and proven; scaling should immediately be handed to private players while the state protects the core IP, he argues. “We should have adopted this model decades ago.”

Now, the changing nature of the war is forcing that grid to open. The defence ministry recently cleared the transfer of technology for conventional missile systems to private Indian firms, allowing commercial factories to manufacture and scale weapon systems.

Indian Space Research Organisation has already proven that this transition works. It has opened rocket manufacturing rights to the private sector. The logic was simple that if India’s space economy was to scale, it cannot rely solely on government facilities and agencies.

Defence faces the same challenge. “DRDO’s evolved role should be to orchestrate rather than to build everything on its own,” urges Pai. “Publish the hard problems with committed procurement budgets, fund parallel private partnerships, leave the IP with the innovator and buy at scale as the anchor customer.”

However, defence carries a layer of friction that space does not. National security demands absolute control over exports, and legacy defence public sector undertakings (DPSUs) already own a massive industrial footprint for heavy machinery and manufacturing.

The solution, therefore, is a fusion of DPSUs with start-ups, say industry experts. Things are moving forward in this direction. By December 2025, roughly 2,000 domestic companies capable of manufacturing DRDO-developed systems were identified.

However, despite these initiatives, challenges remain. Defence-tech start-ups continue to face prolonged gaps between government contracts, creating uncertainty over revenues and production capacity.

So, the question is whether deeper partnerships with DRDO and DPSUs can continue to ensure sustained orders and enable start-ups to scale their innovations.

At the same time, start-ups must still prove they can handle the weight. But it’s tough to survive the long procurement cycles and erratic order pipelines inside a funding landscape that is a fraction of the size enjoyed by consumer tech or software companies.

As ideaForge’s Mehta points out that his firm weathered a brutal 18-month procurement pause from the government just before Operation Sindoor. For a start-up, a dry spell of that length can be fatal.

Meanwhile, India faces a grim geopolitical reality. With China rapidly advancing its defence capabilities and Pakistan aggressively modernising its military with Beijing’s direct support, India no longer has the luxury of discovering its technological gaps mid-conflict.

What India needs now is an ecosystem where state labs take massive technological risks, start-ups get early access to capital, industrial giants scale the proven prototypes and the procurement system provides a predictable route to the battlefield.

The changing times call for India to eliminate the vulnerabilities of tomorrow by building an indomitable defence network today.

As the ancient Chinese military strategist Sun Tzu has famously observed: “The art of war teaches us to rely not on the likelihood of the enemy’s not coming, but on our own readiness to receive him; not on the chance of his not attacking, but rather on the fact that we have made our position unassailable.”