Defence Ministry plans startup-friendly overhaul of procurement rules

The Ministry of Defence is overhauling its procurement process to make it easier for startups to supply equipment and technology to the armed forces, Defence Secretary Rajesh Kumar Singh said, outlining a plan to shorten contract approval timelines and create a dedicated purchase channel for young companies.

Speaking at an event hosted by venture capital firm Accel, Singh—who previously served as the top bureaucrat at the Department for Promotion of Industry and Internal Trade (DPIIT)—said the revised Defence Acquisition Procedure (DAP) will include a “more ambitious” framework than existing schemes like iDEX, which funds prototyping but offers limited visibility on follow-on orders.

“In the next three to four months, we will come out with a document and provide a separate procurement window for startups, which is a bit more ambitious than what the iDEX scheme does in itself,” Singh said

The Innovation for Defence Excellence (iDEX) programme is currently the only government mechanism that funds startups up to the prototyping stage for identified problem statements, with grants of up to Rs 25 crore. “After that development and prototype creation stage, it tends to kind of come to a shuttering (sic) halt… because we are not giving enough visibility in terms of the follow-on orders. That is what I intend to address,” Singh said.

The new procurement window will be accompanied by a target to reduce the average time taken from requirement acceptance to contract signing—currently three to four years—to no more than two years, even for complex platforms. Singh said the Ministry will “squeeze down” the three processes that cause the most delay: creating request-for-proposal documents, conducting field evaluation trials, and finalising cost negotiations.

Another major reform will be dismantling monopolistic barriers that have favoured public sector units (PSUs). “There used to be a kind of de facto monopoly situation where you had to take an NOC from a public sector company in order to even bid… We are doing away with that,” Singh said, adding that competitive bidding will replace nomination-based contracts for most categories, including shipbuilding and munitions.

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Sectors in focus

Singh identified several technology areas where startups could compete alongside larger players, including “drones and counter drones, unmanned systems, electronic warfare suits, sensors, [and] smaller engines of different types.” He said the armed forces plan to create a drone unit in every battalion of the Army, which “essentially means we are looking at literally hundreds of thousands” of systems over time.

He also encouraged joint ventures between Indian startups and foreign companies to bring in critical intellectual property for areas where domestic capability is still developing. “You could tie up with dynamic foreign companies who are looking for a large market like India… They would be able to get access to this market only through a joint venture with an Indian company,” Singh said.

He also said the experience from Operation Sindoor highlighted the growing importance of loitering munitions, drones and counter-drone systems, electronic warfare suites, and advanced sensors—especially ones that can survive in contested environments such as GPS-denied or heavily jammed zones.

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These, according to Singh, are precisely the kinds of areas where even smaller private firms and startups could make meaningful contributions, given the huge upcoming demand. He noted that some categories, like loitering munitions and small drones, could eventually be procured in volumes comparable to ammunition such as bullets and shells, becoming part of routine revenue procurement.