BANGLURU: Anirudh Sharma was a computer-science undergraduate with no training in aerospace when he co-founded Digantara, which gathers intelligence on satellite movements, in 2020. Today it employs 150 people in India, Singapore and America and is valued at more than $65m. That may be a modest sum by Western standards. But it makes Digantara one of the big success stories in India’s flourishing defence-and-aerospace startup scene, the international media reported.
“The Indian defence-tech ecosystem is really buzzing right now,” says Suyash Singh, the founder of GalaxEye, which provides radar and other imagery from satellites. In part this is because India’s startup ecosystem is evolving more broadly. Venture-capital firms and freshly minted billionaires are looking beyond consumer apps as places to invest. Defence-tech firms have benefited from the Indian government’s efforts to promote indigenisation. The most immediate reason for the buzz, however, has been the shock of war.
Just days after the guns fell silent, India launched “emergency procurement” worth almost $5bn. That sum is around 25% of its annual capital spending on defence, notes Sameer Lalwani of the German Marshall Fund, a think-tank in Washington. A substantial chunk of the spending is dedicated to replenishing ammunition, missiles and interceptors that the armed forces consumed during the operation. But there is also a renewed focus on innovation. Sindoor revealed that India needs much better drones and counter-drone defences. That is precisely where many startups have an advantage over established Indian defence firms such as Tata, Kalyani and Mahindra. Intelligence, electronic warfare and artificial intelligence are also priorities.
In 2018 India’s defence ministry started channelling money to startups and other defence companies under a scheme called Innovations for Defence Excellence, or IDEX. The idea was to connect businesses with military units that wanted specific problems solved.
For some IDEX projects, the government promises a minimum order, giving startups guaranteed revenue if their prototype works. The steady growth of the IDEX pot has lubricated that of the sector. The largest individual grants have jumped from $178,000 in 2021 to almost $3m in 2024, and the scheme has attracted more than 600 companies.
Dinesh Kanagraj, the co-founder of Fabheads, which 3D-prints carbon-fibre parts, notes that Western companies can be skittish about selling dual-use components. That is especially so if those parts might find a place in India’s nuclear-weapons programme. Indigenisation is a solution to this problem. India’s own export-control laws, too, deprive startups of what a founder calls “rampant opportunities”.
The other challenge is access to private capital. Investors are setting up funds dedicated to defence and aerospace. But the sums pale compared to funds that invest in consumer tech. “Early-stage funding has improved a lot,” says Sharma. The next level—capital to scale up business to take on the established firms and then crack the foreign market—has yet to materialise. America has more than a dozen “unicorns”—private firms valued at more than $1bn—in defence-related areas; Europe at least three. India is chasing its first.
