India’s defence sector is at a critical juncture, where the confluence of geopolitical tensions, technological advancements, and strategic imperatives demands a paradigm shift from import dependence to indigenous innovation. The ongoing conflicts in Ukraine and Gaza have laid bare the vulnerabilities of global supply chains, exposing the fragility of defence industries that rely heavily on international partnerships. For India, this reality underscores the urgent need to fortify its defence capabilities through homegrown solutions, where technology startups play a pivotal role.
The nature of modern warfare, as evidenced by the 2019 India-Pakistan standoff and recent operations like ‘Sindoor,’ highlights the necessity for agile, adaptive, and technologically superior military responses. These engagements, which could escalate to involve adversaries like China, necessitate a coordinated, joint-response approach. The experiences of Ukraine and Gaza further reinforce the importance of innovation ecosystems that are not only cost-effective but also capable of sustaining both prolonged and rapid military confrontations.
India’s national security strategy hinges on leveraging private capital in defence technology. However, the conventional procurement cycles, often reactive and lacking futuristic vision, are ill-suited to the rapid transformations of contemporary warfare. Today’s battlefield demands precision, speed, and technological supremacy, which can only be achieved through an ecosystem that is adaptive, competent, and consistent. Key technologies such as autonomous systems, AI-driven threat identification, cyber capabilities, and drone technologies require a robust innovation framework.
India has made significant strides in enhancing indigenous capabilities through initiatives like Atmanirbhar Bharat and Make in India. The recent defence budget surge, from INR 2.53 lakh crore to INR 6.81 lakh crore in 2025, coupled with a 70 percent indigenous procurement mandate, signals a strong commitment to self-reliance. The growth in defence exports, from INR 686 crore in 2014 to INR 23,622 crore in 2025, positions India as a burgeoning defence exporter. Supporting policy frameworks, such as the Defence Export Promotion Policy, iDEX, and ADITI 1.0, have fostered an ecosystem of over 1,000 defence startups and 147 military tech companies.
The emergence of defence tech startups in India, inspired by the success of Silicon Valley and Israel’s innovation ecosystems, is a promising development. Companies like Raphe mPhibr exemplify the potential of these startups to contribute significantly to India’s defence capabilities. However, policymakers must strengthen the ecosystem by streamlining bureaucratic processes, enhancing industry-academia collaboration, and creating sustained funding pathways beyond initial grants.
India’s defence-tech sector benefits from mature technical leadership, substantial market demand, and a pipeline of skilled entrepreneurs from institutions like ISRO and DRDO. The potential of dual-use technology further amplifies growth opportunities, enabling startups to diversify revenue streams across commercial and military applications. According to Inc42’s survey, hardware/defence-tech has emerged as a top investment theme for H2 2025, trailing only artificial intelligence.
Despite these advancements, challenges persist. Complex procurement processes, cyclical revenues, long gestation periods, and the risks associated with beta products for military applications pose significant hurdles. Successful defence-tech companies are adopting strategic solutions, such as partnering with defence primes, maintaining an international focus, and developing integrated solutions. Strategic acquisitions and Defence PSUs placing substantial orders on domestic vendors reflect the growing market needs.
Initiatives like INDUS-X and iCET, along with models from Israel’s Unit 8,200 and Ukraine’s BRAVE1, position India to leverage private tech innovation for national security. By 2047, India aims to become a global defence-tech hub, fortifying its strategic autonomy and contributing to global security. The journey is complex, but the path is clear: indigenous innovation, supported by a vibrant startup ecosystem, is the future of India’s defence sector.