AI For Defence: Sarvam, Other AI Startups To Set Up $300 Mn CoE

Bengaluru-based Sarvam and other AI startups are reportedly in advanced talks with the defence ministry to launch a ₹300 Cr Centre of Excellence (CoE) to develop defence capabilities by leveraging indigenous AI technologies. 

Citing sources, ET reported that the CoE is likely to feature multiple intelligence units that will build AI systems trained on Indian data and operational intricacies, including the country’s geographical terrain and climatic conditions.

These AI models will aid in advanced surveillance, reconnaissance, and decision-support systems for the armed forces, the anonymous sources said. 

The development comes as the use of AI in warfare and defence is increasing at an exponential scale. The most recent example of this was the war between the US-Israel and Iran, with AI-supported targeting emerging as a mainstay. The US Army leadership has admitted that advanced AI tools are being leveraged for faster decision making and sifting through mounds of data emerging from the conflict.

While the use of AI in modern warfare became more public during the West Asia conflict, previous conflicts, including the ongoing Ukraine-Russia war, had already laid bare the benefits and threats of using AI in war. The warring parties are extensively using AI for not just data analysis and intelligence gathering but also the deployment of AI-powered autonomous attack drones. 

India is also steadily integrating AI into its defence machinery. The Indian armed forces leveraged the technology during last year’s Operation Sindoor. Defence officials revealed that the armed forces used data from various sensors, weapons and other sources to pinpoint enemy positions in Pakistan by using AI. Additionally, AI-enabled Meteorological Reporting Systems also aided long range vectors for precision targeting by sifting through 26 years of data. 

However, concerns regarding national security breaches remain while leveraging foreign technologies for defence purposes. Countries like the US and China have built large and small language models and hardware to support the technology, raising concerns about AI-sovereignty from a geopolitical standpoint. 

The development comes when Sarvam has been making headlines this year after launching its homegrown LLMs during the IndianAI Summit in February, making it central to India’s push to build indigenous AI capabilities. It has also been selected to receive a nearly ₹220 crore subsidy by MeitY to build sovereign LLMs. 

However, defence-related AI capabilities go beyond LLMs, relying more heavily on data crunching on an industrial scale to aid command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR) systems in accelerated targeting and decision making. 

Other areas where AI can be leveraged in the defence space include unmanned systems (UAVs & drones), satellite systems, integrated air & missile defence systems, naval defence systems, electronic systems, among a plethora of other use cases. 

The development also comes at a time when the defence sector has been opened up to startups by the government, which is hoping to leverage their technological capabilities in India’s defence ecosystem, which is the world’s fifth biggest with an $86 Bn expenditure in 2024. 

This has led to a boom in defence tech funding, with startups raising $68 Mn in 2025 alone. While drone technology monopolised most of these investments, VC money is also flowing into physical defence infrastructure and cyber defence capabilities. 

Notably, around 86% of all defence tech startups in India have integrated AI in their systems, according to Inc42’s Defence Tech Startup Landscape Report 2025, highlighting the increased importance of this emerging technology in securing the national borders. 

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