Post-Operation Sindoor, India's defence-tech sector set for private funding boom

India’s post-Sindoor military landscape is no longer just about showcasing firepower, it’s about creating a sustainable, innovation-driven industrial base.

At the recently held Powering Bharat Summit, the buzz wasn’t just about the battlefield, it was about boardrooms, startups, and strategic investments. Days after Operation Sindoor highlighted India’s growing reliance on homegrown defence capabilities, a panel of defence and drone industry leaders declared that the private sector’s role in India’s military technology ecosystem is about to dramatically expand.

Speaking at the Powering Bharat Summit, organised by Network18 in collaboration with Moneycontrol, News18 India, and CNBC Awaaz,  in an interaction with Moneycontrol's Managing Editor Nalin Mehta, former DRDO chief and current Director General (BrahMos), Dr Sudhir Kumar Mishra set the tone:

“BrahMos is a very potent universal weapon. It goes with brute force, impossible for anyone to stop it... We are very happy that Indian systems, not only Akash and BrahMos, but also electronic technologies and others have all been used either in the foreground or background.”

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Mishra underlined a key principle that’s now gaining ground post-Sindoor: long-term investment over short-term gain.

“When you invest in defence technologies, do not expect a return in 2–3 years. You need to work on R&D for a decade at least…In every vertical, if there are 3,000 companies, it becomes tough for the buyer to support. Why don't you group them? Today there are 400 drone companies. I am telling you that not more than 20 will survive!”

His warning, amid rising enthusiasm, was a call for strategic consolidation and patient capital.

Private sector readiness, public sector confidence

Lt Gen (Dr) Inderjit Singh, Strategic Advisor to ideaForge, echoed this shift in sentiment:

“If the Government of India has the kind of support and confidence in us, we will deliver!”

“We now have more faith in the private sector, and now the private sector has to match up!”

Former armed forces officer Maj Gen Ramesh Chandra Padhi (Retd), now VP at IG Drones, pointed to one of the key friction points: trust.

“The private sector is suspected in India. Why don't you sign long-term agreements? If I do any violation, you can ban me.”

Padhi also highlighted a critical gap in the sensor ecosystem:

“We need a lot of variety of sensors, we need to strengthen that ecosystem so that we can develop them here.”

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From dependence to strategic autonomy

The panel did not shy away from the complex issue of Chinese components in Indian drones. Singh offered a candid take:

“Chinese components are a red herring. We do not have the capability to produce everything indigenously today… For Nano drones, we have collaborated with a startup from the US. When we import, say from Israel, the cost increases 4x.”

Smit Shah, President of the Drone Federation of India, provided a policy roadmap for navigating the China question:

“We have divided the Chinese problem in two parts. First, we have to diversify the supply chain, and secondly, till you figure out diversification, you prioritise cybersecurity.”

On funding, Shah was optimistic:

“Since the effectiveness of drone and anti-drone technologies have now been well proven, investments will increase… There should be an interplay for both public and private funding. There are a few companies who proved and iterated their technologies in less than one week.”

Policy and budget signals align

The government, meanwhile, appears to be betting big on homegrown innovation. According to the Ministry of Defence, 75 percent of the FY26 modernisation budget, Rs 1.11 lakh crore, has been earmarked for domestic procurement, with Rs 27,886 crore specifically for the private sector.

Defence exports tell a similar story. In FY25, private sector exports stood at Rs 15,233 crore, overtaking DPSUs, whose exports were Rs 8,389 crore. The private sector’s contribution to total defence production has also surged to 21 percent, with the overall value hitting a record high of Rs 1.27 lakh crore, a 174 percent increase from 2014-15 levels.

Budget allocations to DRDO have also jumped by 12.4 percent  in FY26, with Rs 14,923 crore marked for capital expenditure. This includes collaborative R&D with private partners through the Technology Development Fund (TDF) and the iDEX initiative, for which the government has allotted Rs 449 crore, a nearly threefold jump in two years.

“In each of the niche technologies we need to identify champions, and give them contracts,” said Lt Gen Singh, reinforcing the need for targeted partnerships.

The big picture

India’s post-Sindoor military landscape is no longer just about showcasing firepower, it’s about creating a sustainable, innovation-driven industrial base.

Dr Mishra put it bluntly:

“We always believed that we should not always go to L1 (lowest bidder). If you go for the lowest, quality can be compromised. We go for T1, technology first.”

As the battle shifts from the war front to the R&D lab and the startup pitch deck, the message is clear: the private sector’s moment in Indian defence is not just coming, it's already here.