Operation Sindoor Sparks Startup Surge: India’s Defence Sector Draws Investor Eyes

After the recent India-Pakistan conflict, defence has become more than just a national security concern – it’s emerging as one of India’s hottest sectors for innovation and investment.

A viral post by EaseMyTrip founder Prashant Pitti, made right after the conflict, brought attention to a wave of interest in India’s defence industry. He wrote:

“This must be the first war experience Gen-Zs had, and must have made them realise how important defence products are! India needs to innovate and make most of its own defence equipment. We have a strong government who is willing to buy India-first equipment!”

His call for defence entrepreneurs to reach out for funding and connections wasn’t just a statement – it sparked action. Angel investors began reaching out, defence-focused startups saw increased interest, and it’s clear: India's defence sector is no longer just about government orders; it's now a space buzzing with entrepreneurial energy.

TICE takes a look at the state of India’s defence startup ecosystem, investor appetite, government initiatives, and where it’s all headed next.

Operation Sindoor Drives Surge for Defence Startups

India’s defence innovation ecosystem has seen explosive growth over the past five years.

According to Defence Ministry data, over 1,300 defence-tech startups have emerged since 2018, working across critical technologies like unmanned systems, AI-based surveillance, wearable combat gear, space tech, and battlefield communication tools.

Startups like:

• ideaForge – one of India’s leading drone companies, now a listed player on the stock market

• Big Bang Boom Solutions – creating cutting-edge counter-drone and underwater defence systems

• Tonbo Imaging – offering advanced night-vision and imaging systems

have shown that India is capable of building globally competitive products.

This growth has been powered by Innovations for Defence Excellence (iDEX), a Defence Ministry-backed initiative offering startups:

• Grants of ₹1.5 to ₹10 crore

• Access to testing facilities

• Partnerships with DRDO, Army, Navy, and Air Force

In its 12th round (DISC-12), iDEX introduced 41 new problem statements—from drone swarm tech to autonomous underwater vehicles—showing the military’s intent to co-develop with startups.

Funding Momentum: Defence No Longer Just PSU-Driven

The interest from investors in India’s defence ecosystem has seen a noticeable surge, especially after recent border escalations.

• Jefferies estimates India's defence sector opportunity at $100–120 billion in the next 5–6 years, with the market growing at 13% CAGR until 2030.

• Angel investors and venture capitalists, earlier wary due to long sales cycles and government procurement hurdles, are now actively scouting defence-tech startups.

• Prashant Pitti’s post was followed by messages from multiple angel investors expressing interest in investing in the sector.

Defence-focused mutual funds are also outperforming:

• HDFC Defence Fund and Motilal Oswal Defence Index Fund have beaten BSE500 in 2024 by wide margins.

• Retail SIPs in defence-themed funds have grown over 40% in just 3 months, showing rising retail confidence.

This shift has been helped by clear government messaging and procurement policies aimed at reducing imports and supporting homegrown technology.

Government Push: Bigger Budgets, Bigger Responsibility

The post-war environment has triggered major shifts in India’s defence spending:

• The Union Budget saw a ₹50,000 crore increase in defence allocation, pushing the total beyond ₹7 lakh crore.

• The Defence Acquisition Council (DAC) has approved acquisitions worth ₹1.45 lakh crore ($17.3 billion) – and 99% of these will be manufactured in India.

Policies such as the Positive Indigenisation Lists, which prohibit the import of over 500 defence items, ensure that Indian startups and manufacturers are prioritized.

Defence Minister Rajnath Singh has repeatedly emphasized the “Make in India, Make for the World” philosophy. iDEX has now been granted autonomous body status, which will likely speed up innovation grant approvals.

Global Collaborations & Export Push

It’s not just about India selling to itself. Exports are booming too.

• In FY 2024-25, India’s defence exports hit a record ₹23,622 crore, up 12% from last year and nearly 34 times higher than FY14 levels.

• 1,762 defence export authorisations were issued in the year—a jump of nearly 17%.

• The number of exporters has grown rapidly, with small and mid-sized firms entering global markets.

India is also entering international partnerships:

• 7 Indian startups have been selected under the India-U.S. Space and Defence Collaboration Program, offering them access to U.S. military technology markets.

What’s Next? Surge in Defence Entrepreneurship Expected

The combination of policy support, investor interest, demand from armed forces, and export opportunities is creating the perfect launchpad for India’s defence-tech sector.

Experts believe we could see:

• Defence unicorns emerge in the next 3–5 years

• Tier-2 and Tier-3 cities producing innovation thanks to DRDO labs and incubators

• More cross-border partnerships with the Quad and European allies

As the EaseMyTrip founder’s post suggests, this isn’t just a government play anymore—it’s becoming a full-blown startup movement.

If You're Building in Defence, Now's Your Time

India has historically been one of the world’s top defence importers. But things are changing fast.
From armed drones made in India to AI-based threat detection tools built by startups, the next generation of warfare might be shaped by Indian tech.

And for the first time, India’s entrepreneurs, investors, and policymakers are all aligned to make that happen.