How India's aerospace and defence startups are waging a new war for dominance

WHEN SANJAY NEKKANTI went to do his Master’s in space technology in Sweden, the choice was not random: he had been hooked when a guest lecturer in college inspired him to build a nanosatellite with some friends. Returning in 2012, he set up Dhruva Space to make satellites but could not get any funding. Nekkanti had to work for seven years on other projects while pitching his idea to 160-odd investors till he got his first funding (₹5 crore). Dhruva’s first commercial order was to design and make solar arrays for satellites.

While Dhruva was looking for funding, the Indian Space Research Organisation (ISRO), beginning in 2013, launched satellites for other countries at costs that Western agencies could not match. Since 2022, eight Dhruva payloads have gone into orbits. Revenues grew from ₹15 lakh in FY20, to ₹13.5 crore in FY24 and could touch ₹30 crore this year. Dhruva Space has an order book of ₹398 crore and could end FY26 with revenues of ₹120 crore.

“We hope to touch ₹1,000 crore revenue in FY28,’’ says Nekkanti. Dhruva has built a satellite manufacturing factory on Hyderabad’s outskirts to make 12 to 30 satellites annually.

Around the time Nekkanti was dreaming of satellites, Merchant Navy Captain Nikunj Parashar decided to quit the sea and try his hand at making equipment the Navy needed. The trigger was the 2008 attack on Mumbai by Pakistani intruders who had landed on small boats and killed 166 people over four days. Parashar launched Sagar Defence Engineering in 2015 to make autonomous surface vehicles such as decoy platforms for use in gunnery practice or for surveys and monitoring. But Parashar had to wait till 2019 to get his first venture capital.

In November 2024, Matangi, its first autonomous vessel, completed a 1,000 nautical mile run from Mumbai to Tuticorin guided by artificial intelligence. The voyage marked a new era in India’s advanced maritime engineering capabilities. From zero revenues in FY19, Sagar is on target for ₹120 crore in FY25, expecting ₹300 crore in FY26 and ₹600 crore in FY27. “We have an order book of ₹750 crore ($95 million) and expect $70 million of orders soon,’’ says Captain Parashar.

VC funds have invested close to ₹530 crore in it. Parashar says the company is developing the world’s largest heavy-lift drones, which can be used in medical emergencies and as air taxis. It is working with Boeing Co subsidiary Liquid Robotics to co-develop and co-produce un-crewed surface vehicle systems in India.

The more, the merrier

Dhruva Space and Sagar Defence are no exceptions. Around 10 aerospace startups, with revenues not more than ₹100-200 crore, have an order book of over $700 million.

The Centre opened space activities to the private sector in 2020, creating IN-SPACe or the Indian National Space Promotion and Authorisation Centre and followed up with a Geospatial Policy in 2022 and a Space Policy in 2023. Over 200 space startups have popped up since. Market intelligence platform Tracxn says these startups attracted $130.2 million in funding in 2023 and $59.1 million in 2024.

Pawan Goenka, chairman of IN-SPACe and a strong proponent of Aatmanirbhar Bharat or Make-in-India, recently told Fortune India that startups account for 168 of the 577 applications for making satellites and other space solutions. The aim is a space economy worth $44 billion by 2030, says Goenka, an engineer by training and an automobile industry veteran who retired as CEO and MD of Mahindra & Mahindra in 2021.

In the defence sector, the government wants domestic production to reach ₹3 lakh crore by 2029. Budget 2025-26 allotted ₹450 crore for an innovation-boosting project called iDEX-ADITI or Innovations for Defence Excellence-Acing Development of Innovative Technologies.

The aim is to get startups to develop about 30 deeptech critical and strategic technologies. The outlay is ₹750 crore from FY24 to FY26.

The Department of Defence Production (DDP) has identified over 600 startups and MSMEs to give the private sector a larger role and signed contracts with 413 till February.

Rockets and satellites

On November 18, 2022, when ISRO launched Vikram-S, it was not just another rocket, another launch from its Sriharikota spaceport. Vikram-S was the first rocket built by India’s private sector. Skyroot Aerospace, founded in 2018 by former ISRO scientists Pawan Kumar Chandana and Naga Bharath Daka, saw a huge demand for small satellites — over 20,000 in the next decade. But small satellites needed cheap launch rockets. Their baby: the Vikram series. Vikram 1 can launch satellites weighing up to 480kg in a 500km low-Earth orbit.

The startup tested the second stage of the rocket successfully in March 2024. Skyroot has set up India’s largest private integrated rocket development facility in Hyderabad and is developing Vikram II and Vikram III, which can carry heavier payloads. The 3-storey Vikram rockets are carbon fibre, and the engines are 3-D printed.

In May 2024, Agnikul Cosmos, a startup incubated at the Indian Institute of Technology Madras created history by launching the world’s first rocket with a single-piece 3D-printed engine. Agnibaan, billed as a sub-orbital technology demonstrator, took off from Agnikul’s launchpad at ISRO’s Sriharikota range. Founded in Chennai in 2017 by Srinath Ravichandran and SPM Moin, Agnikul plans an orbital mission this year.

Photography from space will be a big business: satellite imaging is a $4-4.5 billion market opportunity, and data analysis has a $14 billion market. Bengaluru-based Pixxel is building hyperspectral satellites with the world’s highest resolution. For each 5-metre pixel, the satellite will capture the entire electromagnetic spectrum, not just the colours we see. On January 15, Pixxel launched three satellites as a Firefly constellation and will launch three more in Q2 2025. “We are planning to launch six satellites in 2026 and six more in 2027,’’ says Awais Ahmed, Founder and CEO of Pixxel.

After the first six hyperspectral satellites, each weighing less than 15kg, Pixxel can cover any area on earth every 48 hours, grabbing changes in a host of factors. More such satellites will reduce the time gap.

These satellites will offer real-time data to governments and industry. Fireflies are six times sharper than the 30-meter standard of normal hyperspectral satellites, capturing fine details previously invisible to conventional systems. The images will reveal details of the crop/vegetation, soil, and minerals almost every other day.

Ahmed says Pixxel’s revenues could cross a few hundred crores of rupees within the next two or three years, and it has roped in 65 customers globally.

Bengaluru-based SatSure Analytics is another startup in satellite imagery, coupling it with artificial intelligence to offer insights to industries such as agriculture, insurance, and infrastructure.

Mumbai-based startup Manastu Space recently used its green propulsion system, VYOM 2U, on an ISRO rocket. It uses a non-toxic alternative to conventional chemical systems that help during a rocket’s launch or to make a satellite twist and turn in orbit, and duck space debris.

Manastu was started in 2017 by Tushar Jadhav, an aerospace engineer who has worked at the Defence Research & Development Organisation, and Ashtesh Kumar, a combustion engineer from IIT Bombay.

Bellatrix Aerospace, working on alternative propulsion technologies, has tested the first privately built plasma thruster that uses water as a fuel (converting water into plasma), instead of the usual hydrazine-based chemical propulsion.

Defence deeptech

The Ministry of Defence is helping develop a deeptech defence startup ecosystem. The Indian Army recently inducted 100 robotic dogs or Multi-Utility Legged Equipment (MULE) for use in combat areas, especially in high altitudes. These robots are replacing the mules that the army has traditionally used to carry ordnance and supplies in terrain too steep for vehicles.

The MULEs can climb steps and steep inclines and operate in temperatures ranging from -40 to +55 degrees Celsius with a 15kg payload. Delhi-based drone and robotic solutions startup Aeroarc makes these robotic dogs. Aeroarc has partnered with US drone manufacturer Skydio to advance support for government and defence operations in the Indo-Pacific region.

Swarm-drone maker NewSpace Research & Technologies raised over $52 million last year. In 2021, the Indian Army gave the Bengaluru-based startup a $15 million contract to supply 100 swarm drones. NewSpace has also set a record for high-altitude drones with a solar-powered UAV or unmanned aerial vehicle that can fly for 21 hours.

Garuda Aerospace, an agriculture drone specialist in which cricketer M.S. Dhoni is an investor, is getting into the defence business. “We have a few technology tie-ups in place,” says Agnishwar Jayaprakash, founder and CEO.

Then there is Chennai-based Big Bang Boom Solutions, which has bagged a ₹200-crore order from the Indian Air Force and the Indian Army for its technology to counter drones. It has also developed a system that gives a battle tank’s crew a 360-degree view of the outside world.

Bengaluru-headquartered Digantara, which specialises in space surveillance and intelligence, a global market with a potential of $60 billion, sent up its first satellite, SCOT, aboard Elon Musk’s SpaceX Transporter-12 mission on January 15. (The same mission carried 131 satellites, including three of Pixxel’s Firefly satellites.) Digantara will establish a dedicated facility for spacecraft manufacturing and space optics in Colorado, U.S., investing $10-15 million.

Kochi-based EyeROV says its first commercial underwater drone has completed over 1,000 hours of inspecting dams, bridges and oil pipelines.

With no shortage of technology, funds or markets, many of these innovative and deeptech-assisted aerospace and defence startups could become unicorns. Just think: so far, ISRO has launched 135 Indian satellites, of which only about 60 are operational. The U.S. and China each have about 800 operational satellites.