Right Entry Point for Defence Start-ups

Where should a defence start-up begin when trying to enter the Indian defence ecosystem?

Should it pursue an innovation grant, seek funding for research and development, develop a prototype at its own expense, explore a limited procurement opportunity or follow the mainline capital acquisition route?

The answer depends on the stage of your product, the requirement you are addressing and the route that fits your company today.

In the previous episodes of Defence Procurement: A Practitioner’s Perspective, Brigadier N. P. Singh (Retd) has explained how the Indian defence ecosystem works — from understanding who the actual customer is and what the military buys, to identifying operational priorities, engaging the right organisations, navigating military planning, choosing development pathways and understanding the financial powers that govern expenditure.

Episodes 12 and 13 examined delegated financial powers, including Indigenisation and Research & Development (IR&D) and Army Commanders’ Special Financial Powers (ACSFP). The key lesson was that the purpose of expenditure matters more than the headline financial ceiling.

In Episode 14, the focus shifts to a question that comes even earlier: which door should a start-up knock on first?

The episode maps five potential entry routes:

iDEX and TDF: Innovation and development pathways for eligible start-ups and MSMEs.

Delegated financial powers: Opportunities for specific development or procurement requirements, subject to the applicable provisions.

Make-Two: A route involving industry-funded prototype development.

Low Cost Capital Acquisition: A proposed route under the draft Defence Acquisition Procedure 2026 for limited quantities of proven indigenous equipment for evaluation.

Mainline acquisition categories: The broader acquisition pathways for mature products.

The episode also examines what happens after an iDEX project succeeds, the proposed provisions for partial success and pilot orders, potential opportunities for MSMEs, and the importance of checking Indian-vendor eligibility requirements before applying.

A key distinction throughout is that existing provisions and proposals in the draft DAP 2026 are not the same.

The draft may change, so companies should verify the current approved rules before making business decisions.

The practical takeaway is simple: assess your product’s maturity, ownership structure, the existence of a specific operational need, and the order size and timeline your company can support.

Do not choose the biggest or most visible route. Choose the one that fits your company today.

In the next episode, we move beyond identifying the available entry routes to examine what happens once you are through the door.