May 22, 2025

Partner, India Accelerator

Defense analysts widely agree that a key takeaway from recent conflicts — including Russia-Ukraine, Armenia-Azerbaijan, Israel-Gaza, and now Operation Sindoor — is the effectiveness and cost-efficiency of inexpensive drones and loitering munitions. These low-cost systems are proving to outperform traditional aircraft and tanks that cost millions, signaling that future wars will increasingly be fought using compact, unmanned platforms.
As with everything war and AI, this kind of warfare leverages Unmanned Aerial Vehicles (UAVs) conducting precision strikes, border patrols, and search-and-rescue missions. AI-powered drones are equipped with sophisticated sensors and computer vision capabilities, leveraging Edge Computing for object detection and autonomous navigation. This shift from human-piloted to AI-guided systems represents a major technological innovation in the field. Their low operational costs and high precision make them indispensable in contemporary defence strategies. exemplifying this transformation,is another category of lethal autonomous weapon systems (LAWS). LAWS are machines that can identify, select and kill targets without human intervention. Loitering munitions (LM) are drones that can loiter above a target for some time, calculating the best lines of attack and then attacking the target with high precision. Then there are jerry rigged autonomous and AI guided drones, with small first person view (FPV) attack drones, guided by algorithms, destroying more traditional armour than any other weapon category.
The degree of human involvement in autonomous weapons systems spans a broad spectrum—from ‘human-in-the-loop’ frameworks requiring explicit authorization for engagement, to ‘human-on-the-loop’ systems where a human supervisor retains the ability to override automated actions, and finally to ‘human-out-of-the-loop’ architectures that function independently once activated, executing missions without further human input.
Proponents of AI in warfare argue that such delegation to machines has the potential to reduce human casualties by removing soldiers from high-risk combat zones. Deploying autonomous systems in place of human personnel could not only preserve lives but also shift the burden of combat to expendable machines. Additionally, AI-enabled systems promise increased precision in targeting, potentially reducing collateral damage. In theory, autonomous algorithms can be trained to categorically avoid striking protected entities such as schools or hospitals—and crucially, to follow such constraints without hesitation or emotional compromise. This raises the possibility of warfare that is not only more efficient but also, paradoxically, more precise and ethically controlled.
Ukraine’s domestic drone manufacturing sector has witnessed an exponential surge—expanding from just four producers at the outset of the conflict to over 500 today, with new entrants continuing to emerge. While initial production targets were set at one million drones annually, current estimates suggest the actual output may have already reached five million, largely driven by rapid private sector mobilization. In parallel, Russia is aggressively ramping up its drone production capabilities, resulting in an escalating drone arms race that is reshaping the scale and nature of modern warfare.
From an Indian context, the Drone Rules, 2021, were liberalised and gave a fillip to the local drone ecosystem. Prior to this, old regulations and policies restricted the growth of the Indian drone tech industry. However, liberalised drone rules, the PLI Scheme, the Digital Sky platform and Drone Shakti have made doing business within the industry easier, leading to increased confidence and growth and, ultimately, catching up with other developed nations. Driven by increasing adoption across various sectors, specifically Indian military and defense supported by government initiatives like ‘Make in India’ & ‘Atma Nirbhar Bharat’ the drone market is projected to reach $2.3B by 2033.
Having realised this opportunity early, IA together with its funding arm, Finvolve created its Unmanned Thesis to invest in innovative, AI-powered defense tech startups. Its portfolio includes Zulu - hard kill and loitering munition drones, IG Drones - security, reconnaissance and surveillance drones, Ammunic Systems- advanced munition, fuses and warheads and Indrajaal - an integrated counter drone security platform.
Nations are rapidly shifting conflict to the skies and cyberspace, and traditional defence systems no longer guarantee strategic advantage.
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Artificial intelligence is rapidly becoming the infrastructure layer of the digital economy, and foundation models are the engines powering it.
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Semiconductors, Photonics, FPGA & Intelligent Software
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With the rise of artificial intelligence, even warfare is beginning to take an AI-first approach.
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We are just an advanced breed of monkeys on a minor planet of a very average star. But we can understand the (Startup) Universe. That makes us something very special.
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As a VC fund focused on mobility and EV innovation, we’ve evaluated 500+ startups and engaged deeply with over 100 founders and industry leaders this year. Through these interactions, we’ve observed incredible momentum and inspiring stories shaping the future of electric mobility in India. The ecosystem has made impressive progress, from localized battery innovations to disruptive last-mile solutions. However, challenges in affordability, infrastructure, and technology integration persist, leaving significant room for innovation and reform.
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