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India's push to build a broader private sector defence manufacturing ecosystem has accelerated in recent years, according to Ministry of Defence data, with startups playing an increasingly prominent role. By March 2026, the government's Innovations for Defence Excellence (iDEX) programme had engaged 676 startups, MSMEs and individual innovators, with 551 design-and-development contracts signed, up from 619 startups and 430 contracts in February 2025. Grants of up to Rs 1.5 crore for most projects and up to Rs 10 crore under iDEX Prime, backed by a roughly Rs 499 crore outlay through 2021-26, have been complemented by the Rs 750 crore ADITI scheme, aimed at accelerating deep-tech innovation.
Ministry of Defence figures also show the wider defence ecosystem has expanded alongside these initiatives. Indigenous defence production has grown from Rs 43,746 crore in 2013-14 to roughly Rs 1.78 lakh crore in 2025-26, while defence exports have increased from Rs 686 crore to a record Rs 38,424 crore over the same period. The ministry has released the draft Defence Acquisition Procedure (DAP)-2026, which proposes measures to streamline procurement and increase private sector participation. This year's Union Budget has also reserved about 75 per cent of the defence capital procurement budget for domestic industry.
The figures suggest India has largely succeeded in expanding its defence innovation pipeline. While official data shows that 58 iDEX-developed prototypes have received procurement clearance and 45 procurement contracts worth about Rs 2,326 crore have been signed, it does not reveal how many companies, whether startups graduating from iDEX or more established private defence firms, have gone on to secure repeat orders or long-term supplier relationships with the armed forces.
The Real Test Begins After The Prototype
For Amardeep Singh, founder of Armory, winning a development contract is only the first milestone.
“In defence, a prototype is only the first proof point. The real test begins when a system has to perform repeatedly in unpredictable operational environments,” he said.
According to Singh, the bigger challenge begins once a prototype leaves the laboratory and enters the procurement system. Moving from a successful demonstration to operational deployment requires technologies to be validated under real-world conditions, alongside lengthy procurement cycles and consistent production quality at scale.
He also stressed the need for closer coordination between innovators, testing agencies, the armed forces and procurement authorities, saying, “A stronger bridge across the ecosystem will become necessary for India to ensure that defence startups do not remain mere innovators but become suppliers of critical defence capabilities.”
That, Singh said, is what separates innovators from long-term suppliers.
“Long-term trust is built through reliability, repeatability, mission relevance and the ability to support systems after deployment.”
Companies that consistently deliver mission-ready systems, scale manufacturing while maintaining quality, and provide lifecycle support are more likely to become enduring suppliers than one-time innovators, he added.
Building Ahead OfThe Requirement
While startups are still working to convert early wins into long-term programmes, more established private defence companies are increasingly focused on anticipating future military requirements.
ideaForge CEO Ankit Mehta said the company began investing in electronic warfare resilience, including protection against jamming, spoofing, degraded communications, and GNSS-denied operations, about three to four years ago, well before such capabilities became mainstream procurement requirements.
“Our philosophy has been to build ahead of the market, not to chase it after the requirement becomes obvious.”
Those investments have since moved beyond demonstrations to operational deployments following extensive user acceptance testing and inspections.
"The demo proves possibility, but deployment proves capability and trust," Mehta said, adding that the company's early investment is now translating into a competitive advantage as electronic warfare resilience becomes a mandatory requirement across more procurement programmes.
Beyond surveillance and intelligence platforms, ideaForge is also expanding into combat drones, including loitering munitions, long-range strike systems and swarming technologies through a combination of in-house development and strategic partnerships. While the company illustrates how sustained investment can translate into deployment and follow-on opportunities, there is little publicly available data showing how many companies across the wider defence ecosystem have made a similar transition from prototype development to long-term procurement.
A More Cautious View
Independent analysts also see the broader shift towards private sector participation as significant. According to a senior spokesperson for Defence and National Security at the Observer Research Foundation (ORF), the growing number of private companies securing defence licences and participating in programmes such as the Advanced Medium Combat Aircraft (AMCA), drone manufacturing, ground combat vehicles and naval shipbuilding points to a steadily expanding role for industry.
The spokesperson, however, cautioned against assuming that increased participation will automatically translate into long-term success. Regulatory uncertainty, inconsistent policies governing private-sector participation and companies' ability to meet the armed forces' requirements at scale remain major challenges.
“Internal R&D investments are also vital for defence private-sector companies, and their readiness to take risks will determine whether they are successful in the long run.”
The spokesperson added that greater competition and private sector participation should strengthen the industry over time.
The Missing Metric
Taken together, the government's initiatives have significantly expanded India's defence innovation pipeline by supporting startups and other private-sector innovators in developing new technologies. The next challenge is ensuring those early projects translate into sustained procurement, repeat production orders, and long-term supplier relationships with the armed forces.
That transition remains difficult to measure. While the Ministry of Defence reports the number of startups engaged, development contracts awarded, procurement clearances, and procurement contracts, it does not publicly disclose how many companies have progressed to repeat production orders, long-term maintenance contracts, or formal vendor status with the Army, Navy, or Air Force.
If implemented, the draft DAP-2026, along with the government's continued emphasis on domestic procurement, is expected to help bridge that gap. Whether those reforms help more startups and private companies become long-term defence suppliers or instead primarily benefit larger, established manufacturers with the financial capacity to withstand lengthy procurement cycles and working-capital requirements will likely determine the next phase of India's defence manufacturing ambitions.
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