Eco Survey backs Maharashtra defence, aerospace fund as innovation model

Maharashtra's ₹330 crore Defence & Aerospace Venture Fund (MDAVF), launched in 2018, aims to catalyse manufacturing capabilities among MSMEs in strategic, high-growth sectors

As a potential means of boosting the roughly 16,000 micro, small and medium enterprises (MSMEs) that underpin India’s defence industrial base, the Economic Survey 2025–26 on Thursday highlighted Maharashtra’s alternative investment fund focused on defence and aerospace as a model for state-led innovation financing to advance the country’s self-reliance goals.

 

Describing Maharashtra Defence & Aerospace Venture Fund (MDAVF) as “pioneering”, the survey noted that the model blends state capital with professional fund management to provide critical early- and growth-stage support to MSMEs.

 

The ₹330-crore MDAVF, launched in 2018, aims to catalyse manufacturing capabilities among MSMEs in strategic, high-growth sectors. Managed by IDBI Capital Markets & Securities, the fund focuses on supporting enterprises engaged in precision engineering, aerospace components, unmanned aerial vehicle systems, and defence sub-systems.

 

 

Stressing that the fund illustrates how state-level innovation financing can fast track technological capabilities among MSMEs in sunrise sectors, the survey said, “Such funds can indeed accelerate MSME participation in strategic value chains by catalysing private investment, facilitating certification and R&D, and anchoring enterprises within emerging industrial corridors.”

 

The fund’s investments cover areas ranging from missile systems and aerospace technologies to naval platforms and electronic warfare.

 

“The fund has attracted significant private capital into high-technology MSMEs…,” the survey noted, adding that it had supported these firms in acquiring vital defence certifications, easing supplier development processes, and improving export preparedness.

 

The reference to the fund comes at a time when defence self-reliance has gained greater salience following Operation Sindoor in May 2025, alongside the government’s push to double domestic defence production to ₹3 trillion by FY29 and significantly expand the private sector’s contribution.