Most conversations about India’s technology future are about software, AI and space. There is a quieter shift happening alongside all of that deserves more attention. India is moving from being one of the world’s largest arms importers to a genuine exporter, and the mechanics behind that shift, not the headlines, are what actually determine which companies in this space are worth backing.
In November 2024, Bharat Electronics delivered the first battery of Akash surface-to-air missiles to Armenia, part of a roughly $720 million ( ₹6,000 crore) deal signed in 2022, India’s first export of the system.
BrahMos tells a similar story: The Philippines signed a $375 million (about ₹3,100 crore) contract back in January 2022, with the first battery delivered in April 2024 and a second in April 2025.
Both are early proof that Indian-made defence systems can win and hold serious international customers, not one-off diplomatic gestures.
Domestic ministry of defence orders are price-controlled, slow to pay, and politically dependent. They are the bread and butter of Indian defence companies, but export orders, dollar-denominated and less tied to domestic politics, tend to carry meaningfully higher margins on the same product, without any extra R&D cost. You have already built the product and the factory; exports simply let you sweat the same assets harder. That is why export share, not order book size alone, is doing the real analytical work when evaluating a defence company. A company with a fifth of its order book coming from exports is structurally better positioned than one with none, even with a smaller headline number, though the risk cuts both ways: A shift in a sovereign relationship can undo that multiplier quickly.
The Defence Procurement Manual 2025, effective from November, governs roughly ₹1 lakh crore of annual revenue spend, on maintenance, repair and day-to-day operational readiness. It decentralises approval authority and relaxes delivery penalties to speed up decisions.
This is recurring, often multi-year revenue that rarely makes headlines, but companies with a strong maintenance tail tend to have the most defensible cash flows in the sector, precisely because that income doesn’t hinge on the next big procurement cycle landing on schedule.
Put together: Letter of intent versus firm order, single customer versus diversified, domestic-only versus export exposure, and one-time contract versus recurring maintenance revenue. Applying that lens and a smaller order book that is mostly firm, partly export-driven, and backed by a maintenance contract can be a far stronger business than a larger one that is mostly letters of intent and entirely domestic. The market often prices the two the same. That gap is where the opportunity sits.
For startups, there is now a clearer government-backed ladder: An initial iDEX SPARK grant of up to ₹1.5 crore, iDEX Prime extending that to ₹10 crore, and the ADITI scheme offering up to ₹25 crore for critical technologies.
Clearing this ladder is a real signal, but investors should treat it as one input, not a verdict. iDEX runs on specific challenges, so not every promising technology has a matching one available, and an early grant doesn’t by itself prove a large, scalable market exists rather than a narrow, single-customer need.
A CII-KPMG report projects India’s annual defence budget rising roughly fivefold to ₹31.7 lakh crore by 2047, with exports growing nearly twelvefold to around ₹2.8 lakh crore, and capital expenditure’s share of the budget rising from about 27% to 40%.
On the surface, that export number looks encouraging. Set against the size of the economy India should have by then, it is modest. I also suspect projections like this do not fully account for the effect of intellectual property created in India. That is the variable that could change the picture.
Maintenance contracts are a valuable feature of a good defence business, because they bring predictable, recurring revenue. But a company that services equipment it did not design remains a service business. The companies that matter most are the ones creating original IP.
Some of today’s iDEX-backed startups are working on exactly this kind of deep technology, in areas such as propulsion and reusable launch systems. If they build world-class IP, the result will be high-margin exports of a kind current projections do not capture. That is the part of the story to keep an eye on.
A second shift is worth watching. In the US, defence startups and the venture capital behind them are increasingly moving towards vertical integration and full ownership of a category, rather than supplying one complementary piece. The logic is simple: Defence customers would rather buy from a single vendor than integrate several.
This is the classical approach that produced the large prime contractors of the past. It was practised less in recent decades and is now becoming fashionable again. Indian companies will be no exception, and those thinking in this direction are likely to be the winners.
The export deals above point the same way. Those systems were sold as finished products, not individual components, which is what drives larger and more frequent deals. We have to push our boundaries to build more of them.
India has the order books, the policy support and the early grant pipeline. The question that will decide this sector is who owns the IP, and who owns the category.
(The views expressed are personal)
This article is authored by Ankit Anand, founding partner, Riceberg Ventures.
