Does India's nascent defence startup ecosystem need an AIF to outfox its funding conundrum?

Illustration by Muhabit ul haq via AI.

Synopsis
India’s nascent defence startup ecosystem is facing funding hurdles mainly due to policy bottlenecks. Foreign venture funds are reluctant to invest in defence tech startups in India and spending on capex and R&D are also shrinking. Do we need a separate financial institution for defence startups?

As the most populous country on Planet Earth commanding the globe’s fourth-largest armed forces, India also ticks the box as the nation with the fourth-biggest military expenditure. In such a scenario, India’s military prowess and financial capabilities should resonate in its defence startup ecosystem as a natural corollary. Not really. India, which has earmarked 1.97% of its GDP on defence, has been a late starter when it comes to opening up