Defence startups need orders, not Government VC funds, says Defence Secretary

New Delhi [India], November 29 : India does not need a government-backed venture capital fund for its defence sector, said Defence Secretary of India, Rajesh Kumar Singh, stressing that assured government orders and faster contract approvals are enough to draw private investment into defence manufacturing.

Speaking at ANI's first-ever National Security Summit on Friday, Singh explained that the real driver of growth in the defence sector lies not in government-led venture capital initiatives but in timely orders and efficient procurement processes. "The funding for a defence startup or a defence MSME really depends on its order book," he said. "If we are giving them orders, then they will not have difficulty with funding."

While he did not completely rule out a sovereign venture capital fund for defence, Singh noted that such a move might be only supplementary. "Maybe we can think about it," he said, "but for the most part, the combination of orders, quick contract signings, and procurement is more than enough to attract capital into this sector."

Speaking about the government's target of achieving Rs 3 lakh crore in defence manufacturing and Rs 50,000 crore in exports, Singh said India already has a "fairly robust venture capital ecosystem," with many funds showing growing interest in defence startups.

When asked if India required a similar strategic venture fund like the United States' 1999 innovation, In-Q-Tel, a CIA-funded venture capital firm to accelerate defence technology development, Singh stated, "I don't think it is particularly necessary for the government to set up a venture capital fund," he remarked. "There is enough funding increasingly available for startups that can show promising technologies and prototypes."

Singh emphasised that the government's priority should be to ensure full utilisation of the existing defence budget, speed up domestic contracting, and identify capable firms within the country. "The way the government can support defence is through ensuring that we spend the budget that we have, which we've started doing now, and do as many contracts within the country as we can," he said.

His co-panellists at the National Security Summit were Air Marshal Ashutosh Dixit, Chief of Integrated Defence Staff; D.K. Sunil, Chairman & Managing Director, Hindustan Aeronautics Limited; Arun Ramchandani, Senior VP & Head, L&T Precision Engineering & Systems.

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