Defence Secretary: Orders, Not Government VC Funds, Key for Defence Startups
India’s Defence Secretary Rajesh Kumar Singh has stated that government-backed venture capital funds are unnecessary for the defence sector, emphasizing that assured orders and faster contract approvals are sufficient to attract private investment into defence manufacturing.
Key Takeaways
- Government orders and quick contract approvals are more valuable than VC funds for defence startups
- Existing venture capital ecosystem is robust and showing growing interest in defence
- Priority is full utilization of defence budget and speeding up domestic contracting
Order Book Drives Funding
Speaking at ANI’s National Security Summit, Singh explained that timely orders and efficient procurement processes are the real growth drivers, not government-led VC initiatives. “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.”
Sovereign Fund Only Supplementary
While not completely ruling out a sovereign venture capital fund, Singh noted it would be merely 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.”
Robust VC Ecosystem Already Exists
Discussing the government’s target of achieving Rs 3 lakh crore in defence manufacturing and Rs 50,000 crore in exports, Singh highlighted India’s “fairly robust venture capital ecosystem” with many funds showing growing interest in defence startups.
No Need for US-Style Fund
When asked about creating a strategic fund similar to the US’s In-Q-Tel, Singh stated, “I don’t think it is particularly necessary for the government to set up a venture capital fund. There is enough funding increasingly available for startups that can show promising technologies and prototypes.”
Budget Utilization Priority
Singh emphasized that the government’s focus should be on ensuring full utilization of the existing defence budget, accelerating domestic contracting, and identifying capable domestic firms. “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.
The summit also featured Air Marshal Ashutosh Dixit, Chief of Integrated Defence Staff; D.K. Sunil, Chairman & Managing Director of Hindustan Aeronautics Limited; and Arun Ramchandani, Senior VP & Head of L&T Precision Engineering & Systems.
