Why India's defence procurement needs a second track
India's current procurement model may unintentionally exclude the companies most likely to drive the next wave of battlefield innovation.
In Ukraine, drone warfare has become a defining feature of battlefield strategy, with small unmanned systems repeatedly destroying tanks, artillery and even high-value strategic infrastructure. This shift has accelerated the emergence of a new defence-industrial model in which agile technology companies play a central role. In response, countries such as the United States have expanded fast-track mechanisms like the Defense Innovation Unit and Other Transaction Authority contracts to bring startups into defence procurement. The United Kingdom has introduced rapid innovation contracting under its 2025 Defence Industrial Strategy. Even Russia—despite its traditionally centralised military-industrial system—has increasingly relied on decentralised drone production networks and volunteer-driven manufacturing to quickly field new systems.
Analysts have observed a common trend emerging across these diverse models: the most disruptive military technologies are no longer coming primarily from traditional defence giants, but from startups, AI firms, and dual-use technology companies that can iterate and deploy rapidly. This shift is challenging procurement systems designed in an earlier era of large, capital-intensive defence production.
India, however, continues to rely on a procurement architecture largely built around established defence manufacturers and public-sector undertakings such as Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), Larsen & Toubro, Tata Advanced Systems and organisations linked to the Defence Research and Development Organisation (DRDO), alongside foreign original equipment manufacturers (OEMs) participating under the “Make in India” framework. While this system remains essential for acquiring large platforms—fighter aircraft, submarines, warships, artillery systems and strategic radar networks—it is increasingly being tested by the rise of software-driven and autonomous warfare technologies.
This tension is particularly evident in India’s ongoing procurement of 87 Medium Altitude Long Endurance (MALE) drones for the Indian Air Force, a project valued at approximately Rs 30,000 crore. Ten major Indian companies, including HAL, Tata Advanced Systems, Adani Defence Systems, Larsen & Toubro, Solar Industries Defence and Aerospace, and Raphe mPhibr, have submitted bids. These systems will undergo rigorous evaluation by the air force, with two winners expected to be selected. The first deliveries are projected for induction by mid-2027.
The MALE drones are designed to operate at altitudes between 10,000 and 30,000 feet and remain airborne for more than 24 hours. Equipped with synthetic aperture radar, electro-optical sensors and secure satellite communication systems, they will significantly enhance India’s intelligence, surveillance and reconnaissance capabilities by enabling continuous real-time monitoring of large operational areas. The operational requirements were developed after extensive scientific studies by the armed forces, underscoring the programme’s strategic importance.
However, despite such large-scale initiatives, industry insiders caution that India’s current procurement model may unintentionally exclude the very companies most likely to drive the next wave of battlefield innovation. “Many of these firms are venture-funded, asset-light startups that lack the large revenues, manufacturing infrastructure or long procurement histories typically required to qualify for defence contracts,” says an industry insider on the condition of anonymity. “As a result, they often fail to meet conventional eligibility criteria even when they possess advanced and battle-relevant technologies.”
Critics argue that applying legacy financial and compliance filters to such companies does not necessarily reduce risk; instead, it limits competition and delays access to cutting-edge capabilities. In an environment where technological superiority is increasingly defined by speed of deployment rather than scale of production, this mismatch could have strategic consequences.
To address this gap, a growing number of experts and industry voices are advocating a structural reform of India’s defence acquisition system through a “two-stream” procurement model. Under this proposal, traditional procurement channels would continue to govern major platform acquisitions, while a parallel fast-track system would be created specifically for innovation-driven technologies.
The first stream would remain largely unchanged, handling complex and capital-intensive acquisitions such as fighter aircraft, naval vessels, armoured vehicles, submarines, artillery systems and strategic infrastructure. These programmes would continue to involve established defence manufacturers, public sector undertakings and foreign OEMs. The process would retain existing financial qualification norms, long procurement cycles of three to seven years and oversight by the Defence Acquisition Council under established procurement procedures.
The second stream, however, would represent a significant shift in philosophy. Designed for startups and emerging technology firms, it would focus on drones, autonomous systems, AI-enabled intelligence platforms, electronic warfare tools, software-defined weapons and low-cost precision strike systems. Eligibility would be based not on revenue or asset base but on innovation indicators such as DPIIT (Department for Promotion of Industry and Internal Trade) startup recognition, participation in initiatives like Innovations for Defence Excellence (iDEX), venture capital backing or demonstrated technological capability, explains another industry insider.
“Instead of large-scale production contracts, companies in this stream would begin with small demonstration orders. Successful systems would then be scaled through phased procurement decisions. Software-based systems could be supported through subscription-style update models, while intellectual property rights would remain with the innovating companies, with the Ministry of Defence securing usage rights. Outsourced manufacturing—common among startups—would be formally integrated into the system rather than treated as a limitation,” he said, adding that procurement timelines, most importantly, would be dramatically shortened. A dedicated fast-track evaluation mechanism could enable contract awards within 90 days of proposal submission, with demonstration contracts issued within three months and scaling decisions made within six to 12 months.
Supporters of the model point to global precedents. Ukraine’s Brave1 ecosystem has directly connected over 1,500 defence technology startups with frontline military units, accelerating the deployment of drones and AI systems. In the US, firms such as Anduril and Shield AI have secured major defence contracts through innovation-focused procurement channels despite lacking traditional defence industry backgrounds. The UK’s latest defence industrial strategy has similarly introduced rapid contracting mechanisms to integrate startups alongside established defence firms. Russia’s decentralised drone manufacturing and volunteer-driven procurement networks highlight how urgent battlefield demands are reshaping traditional systems. Taken together, these examples reflect a broader global reality: militaries competing in the era of autonomous warfare are increasingly creating parallel procurement pathways to bypass traditional bottlenecks.
For India, the central question is whether its defence procurement system can evolve quickly enough to keep pace. While existing frameworks remain effective for large-scale platforms, they may not be suited to the rapid cycles of innovation now defining modern warfare. Advocates of reform argue that India already has strong foundations through initiatives such as iDEX and DPIIT recognition, but still lacks a structured bridge that can convert promising prototypes into deployed capabilities at scale.
As warfare becomes increasingly shaped by autonomy, artificial intelligence and mass-produced low-cost systems, the ability to field technology rapidly may prove as decisive as acquiring advanced traditional platforms.
In conclusion, experts suggest that India should create a second stream of procurement that fast-tracks adoption of newer innovation-driven battlefield technologies such as drones, AI and software-driven weapons, while providing for subscription and upgrades.
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In Ukraine, drone warfare has become a defining feature of battlefield strategy, with small unmanned systems repeatedly destroying tanks, artillery and even high-value strategic infrastructure. This shift has accelerated the emergence of a new defence-industrial model in which agile technology companies play a central role. In response, countries such as the United States have expanded fast-track mechanisms like the Defense Innovation Unit and Other Transaction Authority contracts to bring startups into defence procurement. The United Kingdom has introduced rapid innovation contracting under its 2025 Defence Industrial Strategy. Even Russia—despite its traditionally centralised military-industrial system—has increasingly relied on decentralised drone production networks and volunteer-driven manufacturing to quickly field new systems.
Analysts have observed a common trend emerging across these diverse models: the most disruptive military technologies are no longer coming primarily from traditional defence giants, but from startups, AI firms, and dual-use technology companies that can iterate and deploy rapidly. This shift is challenging procurement systems designed in an earlier era of large, capital-intensive defence production.
India, however, continues to rely on a procurement architecture largely built around established defence manufacturers and public-sector undertakings such as Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), Larsen & Toubro, Tata Advanced Systems and organisations linked to the Defence Research and Development Organisation (DRDO), alongside foreign original equipment manufacturers (OEMs) participating under the “Make in India” framework. While this system remains essential for acquiring large platforms—fighter aircraft, submarines, warships, artillery systems and strategic radar networks—it is increasingly being tested by the rise of software-driven and autonomous warfare technologies.
This tension is particularly evident in India’s ongoing procurement of 87 Medium Altitude Long Endurance (MALE) drones for the Indian Air Force, a project valued at approximately Rs 30,000 crore. Ten major Indian companies, including HAL, Tata Advanced Systems, Adani Defence Systems, Larsen & Toubro, Solar Industries Defence and Aerospace, and Raphe mPhibr, have submitted bids. These systems will undergo rigorous evaluation by the air force, with two winners expected to be selected. The first deliveries are projected for induction by mid-2027.
The MALE drones are designed to operate at altitudes between 10,000 and 30,000 feet and remain airborne for more than 24 hours. Equipped with synthetic aperture radar, electro-optical sensors and secure satellite communication systems, they will significantly enhance India’s intelligence, surveillance and reconnaissance capabilities by enabling continuous real-time monitoring of large operational areas. The operational requirements were developed after extensive scientific studies by the armed forces, underscoring the programme’s strategic importance.
However, despite such large-scale initiatives, industry insiders caution that India’s current procurement model may unintentionally exclude the very companies most likely to drive the next wave of battlefield innovation. “Many of these firms are venture-funded, asset-light startups that lack the large revenues, manufacturing infrastructure or long procurement histories typically required to qualify for defence contracts,” says an industry insider on the condition of anonymity. “As a result, they often fail to meet conventional eligibility criteria even when they possess advanced and battle-relevant technologies.”
Critics argue that applying legacy financial and compliance filters to such companies does not necessarily reduce risk; instead, it limits competition and delays access to cutting-edge capabilities. In an environment where technological superiority is increasingly defined by speed of deployment rather than scale of production, this mismatch could have strategic consequences.
To address this gap, a growing number of experts and industry voices are advocating a structural reform of India’s defence acquisition system through a “two-stream” procurement model. Under this proposal, traditional procurement channels would continue to govern major platform acquisitions, while a parallel fast-track system would be created specifically for innovation-driven technologies.
The first stream would remain largely unchanged, handling complex and capital-intensive acquisitions such as fighter aircraft, naval vessels, armoured vehicles, submarines, artillery systems and strategic infrastructure. These programmes would continue to involve established defence manufacturers, public sector undertakings and foreign OEMs. The process would retain existing financial qualification norms, long procurement cycles of three to seven years and oversight by the Defence Acquisition Council under established procurement procedures.
The second stream, however, would represent a significant shift in philosophy. Designed for startups and emerging technology firms, it would focus on drones, autonomous systems, AI-enabled intelligence platforms, electronic warfare tools, software-defined weapons and low-cost precision strike systems. Eligibility would be based not on revenue or asset base but on innovation indicators such as DPIIT (Department for Promotion of Industry and Internal Trade) startup recognition, participation in initiatives like Innovations for Defence Excellence (iDEX), venture capital backing or demonstrated technological capability, explains another industry insider.
“Instead of large-scale production contracts, companies in this stream would begin with small demonstration orders. Successful systems would then be scaled through phased procurement decisions. Software-based systems could be supported through subscription-style update models, while intellectual property rights would remain with the innovating companies, with the Ministry of Defence securing usage rights. Outsourced manufacturing—common among startups—would be formally integrated into the system rather than treated as a limitation,” he said, adding that procurement timelines, most importantly, would be dramatically shortened. A dedicated fast-track evaluation mechanism could enable contract awards within 90 days of proposal submission, with demonstration contracts issued within three months and scaling decisions made within six to 12 months.
Supporters of the model point to global precedents. Ukraine’s Brave1 ecosystem has directly connected over 1,500 defence technology startups with frontline military units, accelerating the deployment of drones and AI systems. In the US, firms such as Anduril and Shield AI have secured major defence contracts through innovation-focused procurement channels despite lacking traditional defence industry backgrounds. The UK’s latest defence industrial strategy has similarly introduced rapid contracting mechanisms to integrate startups alongside established defence firms. Russia’s decentralised drone manufacturing and volunteer-driven procurement networks highlight how urgent battlefield demands are reshaping traditional systems. Taken together, these examples reflect a broader global reality: militaries competing in the era of autonomous warfare are increasingly creating parallel procurement pathways to bypass traditional bottlenecks.
For India, the central question is whether its defence procurement system can evolve quickly enough to keep pace. While existing frameworks remain effective for large-scale platforms, they may not be suited to the rapid cycles of innovation now defining modern warfare. Advocates of reform argue that India already has strong foundations through initiatives such as iDEX and DPIIT recognition, but still lacks a structured bridge that can convert promising prototypes into deployed capabilities at scale.
As warfare becomes increasingly shaped by autonomy, artificial intelligence and mass-produced low-cost systems, the ability to field technology rapidly may prove as decisive as acquiring advanced traditional platforms.
In conclusion, experts suggest that India should create a second stream of procurement that fast-tracks adoption of newer innovation-driven battlefield technologies such as drones, AI and software-driven weapons, while providing for subscription and upgrades.
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