Niti Aayog's Saraswat Raises Alarm Over Defence Start-Ups Fleeing Abroad Due to VC Funding Shortfall
In a stark revelation, Niti Aayog member and former DRDO chief VK Saraswat has pointed out that venture capitalists are not adequately focusing on defence start-ups, leading many of these innovative firms to seek foreign investment and even shift their operational bases abroad. This critical issue was highlighted during his address at the Advantage Vidarbha—Khasdar Audyogik Mahotsav in Nagpur on Sunday, where he emphasized the urgent need for a stronger push from venture capital firms to bolster India's defence innovation ecosystem.
Funding Crisis Forces Defence Start-Ups to Look Overseas
Saraswat, in conversations with journalists on the sidelines of the event, detailed his interactions with several start-ups engaged in cutting-edge defence technologies. "I met some start-ups which are making satellites, rockets, guns, and even pistols. However, the major problem is the lack of adequate funding from venture capitals," he stated. He attributed this funding gap to a pervasive lack of risk-taking culture among domestic investors, which has compelled many defence start-ups to explore financial backing from foreign sources. "That is the reason many are looking for funds from foreign investors and are even shifting abroad," Saraswat added, underscoring the potential brain drain and loss of indigenous capabilities.
Government Support Exists, But Venture Capital Push is Crucial
While acknowledging that the government is actively supporting the start-up ecosystem through various departments and initiatives, Saraswat stressed that this alone is insufficient. "The govt is supporting the start-up ecosystem through its various departments, but a push is needed from venture capitals too," he remarked. This call to action highlights the necessity for a collaborative approach, where public sector efforts are complemented by private investment to foster growth and innovation in the defence sector.
Future Defence Strategy Shaped by Operation Sindoor Lessons
Shifting focus to broader defence priorities, Saraswat indicated that the recent increase in the defence budget will influence weapon acquisition decisions, guided by insights from Operation Sindoor. "The choice of weapons to be acquired following the hike in the defence budget this year will be dictated by the lessons learnt from Operation Sindoor," he explained. He projected that future conflicts will likely be fought on a non-contact basis, necessitating advanced long-range missiles and standalone weapon systems for remote attacks. "The future war would be fought on a non-contact basis. Decisions would be taken whether we need long-range missiles or standalone weapon systems for attacking from a distance," Saraswat elaborated, pointing towards a strategic shift in military preparedness.
Urgent Need for Enhanced Private Sector Involvement
In addition to addressing funding challenges, Saraswat emphasized the critical importance of increasing private sector participation in defence manufacturing. He argued that greater involvement from private enterprises is essential to reduce production costs and enhance competitiveness in the global market. "Saraswat also stressed the need to increase the participation of the private sector in defence manufacturing so that the cost of production is reduced, ensuring competitiveness," he noted. This move could not only drive down expenses but also spur innovation and efficiency within the industry.
The insights from VK Saraswat shed light on a pressing issue within India's defence sector, where a lack of venture capital support is pushing promising start-ups to seek opportunities abroad. As the government continues to back these initiatives, the role of private investors becomes increasingly vital to retain talent and foster homegrown technological advancements. The lessons from recent military operations further underscore the need for strategic investments in next-generation weaponry, all while bolstering private sector engagement to build a robust and self-reliant defence infrastructure.
