Mumbai, Jan 28 (NationPress) The defence technology sector in India achieved a remarkable funding milestone of $247 million in 2025, marking the highest annual funding recorded to date, even as the number of deals declined, according to a report released on Wednesday.

The report from the data intelligence platform Tracxn highlighted that the cumulative equity funding for this sector has amounted to $711 million across 232 funding rounds, with annual funding showing a significant increase from just $5 million in 2016 to the peak of $247 million in 2025.

This surge was primarily fueled by a substantial $100 million mega round, showcasing a trend towards non-combat systems and a concentration of capital among a limited number of companies.

Despite the total number of rounds falling to 30 in 2025, the overall funding nearly doubled year-on-year, largely driven by this mega round.

According to the report, while seed-stage investments remain diverse, late-stage funding is limited, indicating the ecosystem's shift towards execution-focused and platform-led defence capabilities.

Funding is significantly skewed towards different stages, with seed-stage companies securing approximately $118 million across 174 rounds, early-stage firms garnering $527 million over 56 rounds, and late-stage investments totaling $66 million across five rounds.

The distribution of capital within the defence tech value chain indicates a strong preference for infrastructure-oriented segments. Non-Combat Systems attracted $551 million, Combat Weapon Systems received $106 million, Defence Support and Enablement Systems obtained $27 million, and Training and Simulation Solutions also drew $27 million, as per the report.

Bengaluru emerged as the top city for funding, securing $216 million across 61 rounds, followed by Noida with $168 million from 19 rounds and Chennai with $88 million from 26 rounds, the report noted.

India's defence technology ecosystem has transitioned from fragmented innovation towards a more execution-driven capability infrastructure. It has evolved from focusing solely on individual platforms to integrating systems that encompass AI, autonomy, ISR, secure communications, and robust manufacturing capabilities, as stated by the data intelligence platform.

Policy reforms, increasing defence budgets, and geopolitical necessities are positioning defence technology as a fundamental aspect of national infrastructure, linking military readiness, industrial capacity, and long-term economic value.