Defence Startups Don’t Need Government VC Money — They Need Orders’: Defence Secretary Rajesh Kumar Singh

India’s defence startup ecosystem is buzzing with new innovators, deeper investor curiosity, and an urgent national push for self-reliance. Yet, amid this momentum, a clear message came from the country’s highest defence bureaucracy — the real catalyst for growth does not lie in government-backed venture capital funds, but in something far more fundamental: orders.

At a national security summit attended by policymakers, founders, and defence industry leaders, Defence Secretary Rajesh Kumar Singh delivered a sharp, grounded assessment of what India’s young defence companies truly need to scale. And his answer was unambiguous.

“The funding for a defence startup or a defence MSME really depends on its order book,” he said, arguing that it is not capital that defence entrepreneurs struggle with, but the predictability of demand. “If we are giving them orders, then they will not have difficulty with funding.”

This simple point revealed a larger truth: in the defence sector, startups chase contracts — and investors chase startups that have contracts.

The Signal from the Top: Orders Matter More Than VC

Over the past few months, conversations around a potential sovereign venture fund for defence have resurfaced. Many industry voices have wondered whether India needs its own version of In-Q-Tel — the CIA-backed venture capital arm established in 1999 to accelerate deep-tech and intelligence innovation in the US.

But Singh made it clear that India does not need to replicate that model.

“I don’t think it is particularly necessary for the government to set up a venture capital fund,” he remarked plainly.

He didn’t dismiss the idea entirely. “Maybe we can think about it,” he said — but only as a supplementary measure, not the backbone of the ecosystem.

According to him, the combination of assured government orders, faster contract signings, and quicker procurement cycles is more than sufficient to attract private capital into defence manufacturing.

Why Defence Doesn’t Need a Government-Driven VC Strategy

Singh’s position is rooted in the realities of India’s growing defence and dual-use tech landscape.

India already has a “fairly robust venture capital ecosystem,” he noted, one that is increasingly showing serious interest in defence technologies — from AI-powered surveillance systems and drones to space-tech components and advanced materials.

Private funds, both Indian and global, have been actively exploring these opportunities. But their investments hinge on one critical factor: visibility of future orders.

A startup may have a brilliant prototype, a cutting-edge technology, or a unique IP moat — but without purchase commitments from the armed forces or government agencies, few investors are willing to take bold bets.

Singh’s message was a reminder that venture funding follows market confidence, not the other way around.

A Sector in Transition — And in Urgent Need of Speed

Singh also pointed out that India’s defence sector is at a turning point. With a target of ₹3 lakh crore in defence manufacturing and ₹50,000 crore in exports, the government has been aggressively pushing domestic production, indigenisation, and supply-chain strengthening.

But to meet these goals, the system needs to work faster.

For years, defence innovators have complained about long procurement cycles, slow contract approvals, and limited clarity on requirements. Startups, which operate with shorter runways and tighter resources, feel this pressure most acutely.

Singh acknowledged this openly.

The government, he said, is now focusing on:

• Speeding up domestic contracting

• Ensuring full utilisation of the defence budget

• Identifying capable homegrown firms that can deliver

“The way the government can support defence is through ensuring that we spend the budget that we have… and do as many contracts within the country as we can,” he emphasised.

This, in his view, is far more impactful than creating a government-led VC structure that may or may not solve the real bottlenecks.

For India’s defence startups — whether building autonomous drones, battlefield communication systems, cybersecurity tools, advanced sensors, or AI-driven command platforms — the message could not be clearer.

What they need most is:

• Faster procurement

• Predictable demand

• Clear contracting pathways

• A level playing field in domestic orders

Capital follows confidence.
Confidence follows orders.

And according to the Defence Secretary, India is finally moving in that direction.