New Delhi: The Indian Defence Tech with a total funding touched $711 million cumulative capital with a sharp step-up in median cheque sizes, indicating a shift from exploratory venture deployment to infrastructure-style conviction.
The capital concentration intensified, with the top five companies absorbing 53% of all funding and a single $100 million Series B round alone representing over 40% of 2025 inflows, reflecting investor pre-selection of future defence platform anchors rather than broad-based portfolio construction.
Funding reached $247 million in 2025, marking the ecosystem’s highest annual capital inflow, driven by a single $100 million+ funding round raised by Raphe mPhibr.
Non-combat systems accounted for the majority of investment inflow, accounting for 78% of total capital, underscoring investor preference for dual-use, procurement-visible infrastructure layers, over long-gestation combat platforms.
Geographically, Bengaluru ($216M), Noida ($168M), and Chennai ($88M) emerged as the top-funded cities, together accounting for over 66% of total funding in the ecosystem.
Exit activity remained sparse but structurally meaningful, with 5 IPOs and only 3 acquisitions, since 2010, indicating that liquidity is governed by sovereign trust and procurement embeddedness, reinforcing defence tech as an institutionally validated, long-horizon asset class.
Tracxn which released its report on India’s defence technology ecosystem, outlined a transition from fragmented innovation toward an execution-driven capability infrastructure. Defence technology in India is no longer defined by individual platforms, but by integrated systems spanning AI, autonomy, ISR, secure communications, and manufacturing depth. Policy reforms, rising defence budgets, and geopolitical imperatives are positioning defence technology as national infrastructure, linking military readiness, industrial capacity, and long-term economic value.
India’s defence tech sector has attracted $711 million in all-time equity funding across 232 rounds. Annual funding has risen from $5.0 million in 2016 to a peak of $247 million in 2025 YTD. Funding increased from $37 million in 2021 to $75 million in 2022, followed by $139 million in 2023, and $125 million across 42 rounds in 2024. Despite a lower number of rounds in 2025 YTD (30 rounds), total funding nearly doubled year-over-year, largely driven by Raphe mPhibr’s $100 million Series B round. The number of annual funding rounds increased from 5 in 2016 to 42 in 2024, before moderating in 2025 YTD.
As of 2025 YTD, defence tech funding in India remains heavily front-loaded. Seed-stage companies raised approximately $118 million across 174 rounds, early-stage companies absorbed $527 million across 56 rounds, and late-stage funding totaled $66.0 million across just 5 rounds.
Capital distribution across the defence tech value chain shows a strong skew toward infrastructure-oriented segments. Non-Combat Systems attracted $551 million, followed by Combat Weapon Systems at $106 million, Defence Support and Enablement Systems at $27 million, and Training and Simulation Solutions at $27 million. Market concentration data shows Non-Combat Systems account for 74% of startups, while Combat Weapon Systems represent 15%, Defence Support and Enablement Systems 6%, and Training and Simulation Solutions 5%.
Exit activity in India’s defence tech ecosystem has remained limited in volume but meaningful in signal, with 5 IPOs since 2010 and 3 acquisitions recorded to date.
Bengaluru emerged as the most funded city with $216 million raised across 61 rounds, followed by Noida with $168 million across 19 rounds, and Chennai with $88 million across 26 rounds.
Around 116 VC firms have participated in India’s defence tech funding to date. Venture Catalysts emerged as the most active investor with 6 rounds, followed by HDA Tech Growth, Inflection Point Ventures, and Accel with 5 rounds each.
India’s defence tech ecosystem recorded $247 million in funding in 2025 YTD, marking its highest annual inflow to date despite a lower number of deals. The dominance of Non-Combat Systems, the emergence of a $100 million mega round, and capital concentration among a small set of companies highlight a selective funding landscape. While seed-stage activity remains broad, late-stage funding continues to be limited, reinforcing the ecosystem’s progression toward execution-focused and platform-led defence capabilities.
Tracxn Technologies Ltd. is a data intelligence platform for private market research, tracking 5+ million entities through 2900+ feeds categorised across industries, sub-sectors, geographies, and networks globally. It has become one of the leading providers of private company data and ranks among the top five players globally in terms of the number of companies and web domains profiled.
