India's defence AI moment faces critical gaps. While defence tech startups raised $68 million in 2025 alone, nearly 90% of the decade's total funding, India lacks homegrown defence AI companies comparable to Palantir or Anduril. The country's software expertise is established, but manufacturing precision for defence-grade systems remains underdeveloped. With the defence budget rising 15.19% to ₹7.85 lakh crore in FY27, policy support through iDEX and Army Design Bureau initiatives provides structured procurement pathways. However, talent attraction poses a significant challenge as defence startups struggle competing with mainstream tech sector compensation. As global conflicts increasingly center on AI and autonomous systems, India faces both opportunity and urgency to build indigenous defence capabilities before the competitive landscape shifts further.
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