India’s Defence Secretary, Rajesh Kumar Singh, has made a compelling case against the establishment of a government-backed venture capital fund for the country’s defence sector. Speaking at a national security summit on Friday, Singh argued that assured government orders and faster contract approvals are sufficient to attract private investment into defence manufacturing.
“If we are giving them orders, then they will not have difficulty with funding,” Singh said, underscoring the importance of a robust order book for defence startups and MSMEs. His remarks challenge the notion that government-led venture capital initiatives are essential for driving growth in the defence industry.
While Singh did not completely dismiss the idea of a sovereign venture capital fund for defence, he suggested that such a move would be supplementary at best. “Maybe we can think about it,” he conceded, “but for the most part, the combination of orders, quick contract signings, and procurement is more than enough to attract capital into this sector.”
Singh’s comments come at a critical time for India’s defence sector, which aims to achieve Rs 3 lakh crore in defence manufacturing and Rs 50,000 crore in exports. He highlighted the country’s “fairly robust venture capital ecosystem,” noting that many funds are increasingly interested in defence startups. However, he emphasised that the government’s primary role should be to ensure the full utilisation of the existing defence budget, expedite domestic contracting, and identify capable firms within the country.
When asked if India required a strategic venture fund similar to the United States’ In-Q-Tel—a CIA-funded venture capital firm established in 1999 to accelerate defence technology development—Singh was unequivocal. “I don’t think it is particularly necessary for the government to set up a venture capital fund,” he remarked. “There is enough funding increasingly available for startups that can show promising technologies and prototypes.”
Singh’s perspective aligns with a broader shift towards streamlining procurement processes and ensuring timely orders to foster growth in the defence sector. By focusing on these areas, the government can create a more conducive environment for private investment without the need for direct financial intervention.
The Defence Secretary’s remarks have sparked a debate within the industry, with some experts agreeing that assured orders and efficient procurement processes are key to driving innovation and investment. Others, however, argue that a government-backed venture capital fund could provide additional support to startups and MSMEs, helping them navigate the complexities of the defence sector.
As India continues to strengthen its defence capabilities and expand its manufacturing base, the debate over the role of government-backed venture capital funds will likely intensify. For now, Singh’s emphasis on orders, quick contract signings, and procurement remains a guiding principle for the sector’s growth.