Beyond the urgency promoted by the conflict, there is a strong impulse of policies and an increase in government support with initiatives such as Atmanirbhar Bharat and Make in India programs that have attracted many strategic investments | Photo credit: Vijay Soneji
As India increases efforts to become self -sufficient defense, new companies in the technological defense sector are seeing a growing interest of investors. According to Tracxn data, since 2019, these new companies have raised a total of $ 349 million in 91 capital financing rounds.
Geopolitics, policy thrust and innovation feed this growth. The use of drones in global conflicts together with the increase in geopolitical tensions has highlighted the need to develop more effective and more receptive indigenous defense technology. “For countries like India, which are still building fifth generation capabilities and whose defense budgets are significantly smaller than global powers, technologies such as drones offer scalable and indigenous alternatives in Cornerstone, managing Prasad.
Beyond the urgency promoted by the conflict, there is a strong political impulse and an increase in government support with initiatives such as Atmanirbhar Bharat and manufacturing programs in India that have attracted many strategic investments. “As of February 2025, these efforts have led to the firm or around 253 comprehension memorandes (MOU), attracting possible investments worth ₹ 53,439 million rupees. In addition, the policy of defense production and the export policy and DPEPPPP) points to 2025, creating opportunities for new companies,” said Neha Singh Cuffunder de Tracxn.
Parameters for investments
The new defense companies require long -term investments and require longer gestational periods and deeper technical commitments.
Investors prioritize new companies with a strong technical depth, an USP focused and the ability to climb in cases of use of the critical mission. This also includes regulatory preparation, adaptable and modular technology, and the ability to collaborate with larger defense cousins, which still receive a majority of acquisition budgets.
“The property of IP is important, but more than that, we evaluate whether technology can evolve in an ecosystem that changes rapidly. Defense needs change rapidly: today it is surveillance, tomorrow could be kamikaze or the useful load of the largest load and, therefore, we focus on the budget of most of the players, since it remains the regulatory capacity, as is the ability to collaborate with the ability to collaborate.
The new companies in this sector have to focus on the deep R&D and the capabilities at the platform level instead of disseminating thin or persecution contracts to obtain a competitive advantage over inherited players.
Emerging trends
“Investors show a growing interest in double -use technologies with military and civil applications, such as autonomous gifts, AI surveillance systems, underwater drones and hyperspectral satellites,” said Singh.
Chintan Antani, vice president, Seed & Acceleration in Iima Ventures said: “Auxiliary spaces for these products and technologies can also capture. This includes propulsion technologies (aerospace/space space), technical textiles and myconductor applications.” ”
There is a growing demand for offensive capabilities such as the delivery of payload, suicide drones and autonomous mission systems. This also leaves space for collaboration. “We hope to see more collaborations between new and large OEM companies, and between different new companies, which provide complementary capabilities. In the future, the most successful defense technology players in India will be those that feed the atitic ecosystem, either in communication, control systems or autonomy driven by AI,” Prasad added.
(With entries from Business line Internal Nethra Sailh)
Posted on May 11, 2025