Defence, space-tech startups move beyond metros for testing, manufacturing

As defence and space-tech ventures move from design to deployment, many are expanding testing, manufacturing and training operations into smaller cities to access land, airspace and lower costs

As India’s defence and space-tech startups move from design to deployment, they are increasingly expanding their testing, manufacturing, and training operations into Tier-II and Tier-III cities even as corporate headquarters continue to be in metros like Bengaluru, Delhi-NCR, and Mumbai.

 

The shift reflects the evolution of India’s startup ecosystem beyond software-led innovation into hardware-intensive sectors, where large-scale manufacturing and field testing have become critical to growth.

 

“Defense technologies cannot be validated inside office campuses; they need varied terrain, longer operating distances, and practical deployment environments,” said Preet Sandhu, founder and managing director of AVPL International.

 

AVPL, headquartered in Gurugram, now operates across more than 93 Tier-II and Tier-III cities and rural regions. The company has established a drone manufacturing and skilling development facility in Sisai, Haryana, and plans additional manufacturing facilities in Aligarh (Uttar Pradesh) and Patna (Bihar).

Defence-tech startups eye smaller cities

For startups building drones, one of the biggest constraints in metropolitan areas is access to airspace as dense populations, aviation restrictions and safety concerns often make large-scale testing difficult.

 

“Open airspace is most critical. In a metro city, the airspace is incredibly restricted. You are dealing with hundreds of flights daily, strict no-fly zones, population density concerns, and regulatory red tape that makes even basic drone testing a nightmare. It is absolutely essential for Beyond Visual Line of Sight (BVLOS) testing, which is the future of autonomous drone operations,” said Satyabrata Satapathy, co-founder and chief executive officer of BonV Aero.

 

BonV Aero, a Bhubaneswar-based startup, is building a Rs 300 crore Drone Park in Khordha (Orissa) and, in partnership with the state government, it is also developing a drone testing corridor in Rangeilunda, Ganjam district. The company says the corridor will allow drone operations at low altitudes of up to 1,000 metres and serve as a regulatory sandbox for technologies such as swarm operations and autonomous airspace management.

 

Echoing Satapathy's views, Sandhu added: “Drone testing, particularly for defense, surveillance, logistics and anti-drone applications, requires larger and relatively unrestricted operating areas. And Tier-II and rural locations offer access to large tracts of land where realistic field conditions can be recreated. Also, proximity to end users is important. Agriculture drones, logistics drones, and surveillance systems are ultimately deployed in rural and border areas.”

 

Commenting on the movement of startups outside metros, Padmaja Ruparel, co-founder of angel investment platform IAN Group said: “There is a fundamental change taking place in India's defense startup ecosystem. A few years ago, low-value manufacturing was the main way that Indian businesses participated in international supply chains. Today, however, startups are producing drones, aircraft systems, sophisticated electronics, and strategic technologies that are vital to national security.”

Hardware startups seek land, safety, and scale

The trend, however, is not limited to drone companies, and the reason to penetrate into smaller cities is not just open airspace.

 

Space-tech startup Trishul Space, which is based out of IIT Delhi, operates a testing facility in Muradnagar, UP. The site houses dedicated test stands for torch igniters and green propulsion systems used in rocket engines.

 

“Our Muradnagar test facility offers several advantages over a metro-city location. It provides a safer environment for propulsion testing, access to larger and more cost-effective infrastructure, and greater flexibility for future expansion. At the same time, its proximity to our headquarters enables efficient coordination between our engineering and testing teams while maintaining access to the NCR’s industrial and supplier ecosystem,” said Aditya Singh, co-founder and chief executive officer of Trishul.

 

Similarly, Navi Mumbai-based Manastu Space has conducted tests from Narivali village in Thane district, where it established a 10,000-square-foot ground testing facility.

 

Tushar Jadhav, co-founder of Manastu, said: “By moving to a Tier-II or rural location, we gain the space and freedom to conduct large-scale experiments, and streamline paperwork and approvals, making operations smoother. This causes minimal disruption to communities, as activities are carried out away from dense urban populations. This combination allows us to innovate faster and more effectively than would be possible in a city environment.”

 

InterCosmos, a Chennai-based space-tech startup, too, said it has conducted almost all of its engineering development and two proof-of-concepts in Thiruvananthapuram. “We qualified our propellants, proving their hypergolicity, and conducted our first injector hot fire tests,” said Gokul R, the co-founder and chief executive officer of the company.

 

The startups mentioned above unanimously agreed that lower land, labour, and operating costs have allowed the respective companies to invest more aggressively in research and development while scaling infrastructure, noting that facility expansion in smaller cities is significantly easier and more economical than in metropolitan centres.