India’s defence technology sector is witnessing a significant shift, driven by a vibrant startup ecosystem, progressive government initiatives, and a focused vision for self-reliance. What was once seen purely as a matter of national security is now emerging as a powerful catalyst for economic and technological advancement. Startups are developing cutting-edge solutions in areas like autonomous systems, cybersecurity, battlefield AI, and advanced electronics, aligned with India’s evolving defence priorities.
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The Strategic Importance of Defence Technology in India’s Growth

Historically, the defence sector worldwide has been a cradle of innovation, birthing technologies that later permeate civilian life—from the internet and microwave ovens to GPS and advanced electronics. India’s defence R&D has similarly laid the groundwork for technological advancement, but for decades, the country remained heavily reliant on imports for critical military hardware. This dependency, while ensuring immediate capability, created strategic vulnerabilities and economic drain.

Today, India is decisively shifting gears. With a defence budget of $78.7 billion for 2025-26, up 9.5% from the previous year, and one of the largest active troop counts globally (over 1.47 million), the country recognizes that indigenous innovation is essential for strategic autonomy and economic vitality. The government’s Atmanirbhar Bharat initiative and Make In India defence manufacturing policies have catalyzed a surge in homegrown defence startups, now numbering over 1,300, working across cutting-edge domains such as unmanned systems, AI-driven battlefield management, cybersecurity, and advanced materials. Read More

The Defence Startup Ecosystem: Innovation Across Domains

India’s defence innovation ecosystem is diverse and rapidly maturing, with startups addressing critical technological challenges across multiple segments:

Advanced Land Systems and Autonomous Ground Vehicles
Startups are developing subsystems for artillery platforms like Dhanush and ATAGS and armored vehicles such as Arjun tanks. Innovations include autonomous navigation systems capable of operating in challenging terrains, from the high-altitude Himalayas to desert environments, and human-machine interfaces designed for battlefield efficiency and safety. Companies like Torus Robotics are pioneering unmanned ground vehicles to transport heavy loads, reducing soldier fatigue and enhancing operational logistics.

Maritime Defence Technologies
India’s extensive coastline and strategic maritime interests necessitate advanced naval capabilities. Startups such as EyeROV and Sagar Defence Engineering are innovating underwater and surface unmanned vehicles for reconnaissance, harbour security, and anti-submarine warfare. These technologies are crucial for safeguarding maritime trade routes and projecting naval power in the Indian Ocean region.

AI and Battlefield Management Systems
Artificial intelligence is revolutionizing battlefield operations by integrating data from multiple sensors, enabling predictive threat analysis, and optimizing resource allocation in real time. Startups specializing in computational intelligence are developing platforms that enhance situational awareness, decision-making speed, and operational coordination across army, navy, and air force units.

Advanced Electronics, Communication, and Electronic Warfare
With the electromagnetic spectrum becoming a contested domain, startups are focusing on software-defined radios, secure communication systems, and electronic warfare capabilities. These technologies ensure resilient battlefield communication and counter adversarial electronic attacks, a critical factor in modern multi-domain warfare.

Cybersecurity
Defence cybersecurity startups are developing frameworks to protect sensitive military networks from cyberattacks and information warfare. Their solutions enable secure battlefield communication, real-time analytics, and defensive as well as offensive cyber operations, reinforcing India’s digital sovereignty in the defence domain.
The Role of iDEX and Government Initiatives in Fueling Innovation

The Ministry of Defence’s Innovations for Defence Excellence (iDEX) program has been a game-changer for India’s defence startup ecosystem. Launched in 2018, iDEX issues open challenges based on real operational problems faced by the armed forces, inviting startups to propose innovative solutions. Winners receive grants up to $1.2 million and access to testing facilities, mentorship, and partnerships with Defence Research and Development Organisation (DRDO) and military branches.

Despite these benefits, the path from prototype to procurement remains challenging. Only about 10% of iDEX agreements have resulted in actual procurement contracts, reflecting the rigorous regulatory approvals, certification processes, and high-stakes field trials startups must navigate. Limited access to specialized testing infrastructure, often controlled by Defence Public Sector Undertakings (DPSUs), further constrains.


Nonetheless, iDEX’s problem statements have expanded to cover emerging technologies such as drone swarm coordination, autonomous underwater vehicles, and AI-enabled surveillance, signaling the military’s intent to co-develop with startups and integrate their innovations into operational systems. Know More

Unmanned Systems: The Vanguard of Indian Defence Innovation

One of the most visible and impactful areas of Indian defence innovation is unmanned systems, including aerial, ground, and underwater drones. IdeaForge, a pioneer since 2007, supplies UAVs for border surveillance and high-altitude transport. It has inspired a new generation of startups like Flying Wedge (aerial drones), Torus Robotics (unmanned ground vehicles), and EyeROV (underwater drones), each addressing unique operational challenges posed by India’s diverse geography.

The pandemic accelerated robotics adoption globally, and India’s defence sector was no exception. The use of drones in recent conflicts such as the Galwan clash and the Russia-Ukraine war underscored their tactical importance, driving investor interest and government support.
Export Potential and Global Competitiveness

India’s defence exports have surged from ₹686 crore in 2013-14 to over ₹2,083 crore in 2022-23, with expectations to reach ₹8,000 crore by 2029. This growth is supported by government efforts to ease export regulations, provide dual-use certifications, and establish strategic partnerships with global defence suppliers, particularly in Europe.

For startups, capturing export markets requires meeting stringent international certification standards and focusing on niche technologies where India has comparative advantages, such as AI-enabled battlefield management and dual-use software. The government’s push to position India as a reliable supplier to over 90 countries reflects a strategic vision to leverage geopolitical shifts and rising global defence demand.

Financial Engineering and Investment Landscape

Defence tech startups face unique challenges: long product development cycles, complex certification processes, and unpredictable government procurement timelines. This necessitates patient capital and specialized investors who understand sector dynamics.

Emerging investment strategies include:


Dual-Use Technology Focus: Startups develop products with civilian and military applications, creating diversified revenue streams.

Investment Consortia: Collaboration among venture capitalists, government bodies, and defence experts pools resources and expertise.

Dedicated Defence Funds of Funds: Proposals for $3–4 billion+ Alternative Investment Funds (AIFs) targeting verticals like AI, maritime tech, and cybersecurity.

Government Risk Mitigation: First-loss guarantees (20–25%), matching capital contributions (1:2 or 1:3), IP incentives, and tax benefits to attract private investment.

Such financial engineering aims to bridge the gap between innovation and scale, enabling startups to transition from prototypes to mass production and export readiness.

Indigenous Defence Technologies: Beyond Startups

India’s defence innovation is not limited to startups. Indigenous missile systems like BrahMos and Akash provide strategic deterrence, while the acquisition of the S-400 Triumf air defence system enhances aerial security with cutting-edge radar and multi-target engagement capabilities. The Tejas Light Combat Aircraft and the INS Vikrant aircraft carrier demonstrate India’s growing aerospace and naval manufacturing prowess.

Unmanned aerial vehicles developed by DRDO and private players complement startup innovations, while cybersecurity and AI integration ensure India’s defence technology remains agile against evolving threats. Space-based defence capabilities, including anti-satellite tests and satellite intelligence, further extend India’s strategic reach.

The Road Ahead: India’s Defence Innovation Imperative

India’s ambition to achieve ₹23 lakh crore in defence production and significant exports by 2029 hinges on its ability to nurture startups as the innovation engine of self-reliance and global leadership. The convergence of visionary policies, matured research institutions, technological capabilities, and patient capital will determine whether India can transform geopolitical necessity into a strategic innovation advantage.

Recent border tensions and conflicts have underscored the urgency of this transformation, propelling India into the elite circle of nations shaping the future of defence technology. The country’s defence startup ecosystem, supported by initiatives like iDEX and bolstered by increasing investor interest, is poised to drive this revolution.

Seafund’s Defence Perspective Beyond Capital Allocation: Engineering National Technological Sovereignty. At Seafund, we’re witnessing something extraordinary—India’s defence technology sector isn’t just evolving, it’s fundamentally reimagining the intersection of national security and technological innovation. This isn’t your typical investment thesis; it’s a strategic bet on transformative potential.
Our Deep-Tech Investment Philosophy: We’re backing ventures that understand a crucial insight: the most powerful technologies serve dual purposes. AI systems that enhance battlefield intelligence also revolutionize civilian logistics. Autonomous platforms protecting borders simultaneously transform commercial transportation. Advanced materials strengthening defense capabilities become the backbone of next-generation infrastructure.
Strategic Market Dynamics: Here’s what traditional analysis misses—defence tech operates on different timelines and regulatory frameworks. These aren’t obstacles; they’re competitive moats. Companies that master extended development cycles and complex compliance create virtually unassailable market positions.
Our Value Proposition Goes Beyond Funding: We provide patient capital, yes—but more importantly, we offer strategic ecosystem access. Think of it as engineering a pathway from prototype to production scale, then leveraging that foundation for global market penetration.
The Bigger Picture: We’re not just investing in companies; we’re catalyzing India’s journey from technological dependency to export leadership. Every portfolio company represents a strategic node in building comprehensive national technological sovereignty.
This is how nations leapfrog from followers to global leaders—through deliberate, strategic innovation backed by visionary capital.
FAQs

Why is venture capital important in India’s defence tech ecosystem?
Venture capital provides patient, risk-tolerant funding crucial for long development cycles, certification processes, and scaling up defence innovations developed by startups.

What is iDEX and how does it support defence startups?
iDEX (Innovations for Defence Excellence) is a government program that funds startups solving real military challenges, offering grants, testing access, and collaborations with defence agencies.

Which technologies are Indian defence startups focusing on?
Key areas include unmanned aerial and ground systems, battlefield AI, secure communications, electronic warfare, and cybersecurity.

What challenges do defence startups face in India?
Major hurdles include slow procurement, limited access to testing facilities, regulatory delays, and difficulty in transitioning from prototype to production.

How is India promoting defence exports through startups?
By easing export rules, supporting certification, and encouraging dual-use technologies, the government aims to make India a global supplier of niche, high-tech defence products.


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Table of Content
1. The Strategic Importance of Defence Technology in India’s Growth
2. The Defence Startup Ecosystem: Innovation Across Domains
3. The Role of iDEX and Government Initiatives in Fueling Innovation
4. Unmanned Systems: The Vanguard of Indian Defence Innovation
5. Export Potential and Global Competitiveness
6. Financial Engineering and Investment Landscape
7. Indigenous Defence Technologies: Beyond Startups
8. The Road Ahead: India’s Defence Innovation Imperative
9. Seafund’s Defence Perspective
10. FAQs