This week on Eximius Echo, we’re unpacking how AI is moving beyond consumer and enterprise use cases into the systems shaping modern defence.
If you’re new here, Eximius is a pre-seed VC fund backing bold ideas in FinTech, ConsumerTech, and Enterprise AI. Through this newsletter, we explore the structural shifts shaping tomorrow’s markets.
Let’s dive in.
For the past few years, most conversations around AI have been shaped by consumer and enterprise use cases: chatbots, coding copilots, productivity tools, image generation, and application development. While that framing still matters, it no longer tells the whole story.
AI is now becoming a core layer of modern warfare.
What began as software built to write code, interpret text, analyse images, and automate workflows is now being deployed in intelligence systems, cyber operations, autonomous drones, battlefield decision-making, and information warfare. And mind you, the shift isn’t theoretical; it is already visible across active conflict zones, defence budgets, and military procurement priorities.
The U.S. Department of Defence (DoD) now manages 685+ active AI projects, and its FY2026 AI request stands at $13.4 billion. Ukraine produced 2 million drones in 2024 and is targeting 5 million in 2025, many of them increasingly shaped by AI-enabled targeting, autonomy, and battlefield coordination. India, too, is moving quickly, with 75+ AI products reportedly operationalised across border intrusion detection, maritime awareness, and battlefield deployments.
This matters because defence is no longer only about superior hardware. It is increasingly about superior software, cleaner data, faster coordination, and better machine-led decision loops. The side that can process information faster, adapt faster, and act faster starts to gain the edge.
That shift is visible across the defence value chain.
AI Across the Defence Value Chain
At one end, AI is transforming ISR, or intelligence, surveillance, and reconnaissance. Systems like Palantir’s Maven Smart System and TITAN compress targeting cycles from hours to minutes by fusing drone, satellite, and battlefield data into a unified picture. Israel’s Gospel reportedly generates 100+ targeting recommendations a day. Ukraine’s Griselda uses NLP to analyse intercepted Russian communications in near real time.
At another end, AI is becoming central to cyber warfare. Offensive systems can scan networks at machine speed, generate malware, and exploit vulnerabilities at a scale no human team can match. Defensive AI is now the only credible response. The U.S. DoD’s FY26 budget includes $14.3 billion for cyberspace activities and $1.6 billion for cryptographic modernisation, underscoring just how central this domain has become.
Then there is the informational battlefield, perhaps the most publicly visible and least understood front in this new AI-led era of warfare.
Deepfakes, synthetic media, and AI-generated propaganda are no longer fringe internet curiosities; they’re strategic tools. Over the past year, we’ve seen manipulated narratives travel at extraordinary speed, especially during moments of geopolitical tension. During the India-Pakistan conflict, deepfake and synthetic war content became a vehicle for projection, fear, confusion, and narrative capture. A deepfake involving journalist Palki Sharma also reflected how trusted public voices can be repurposed to seed misinformation and shape perceptions at scale.
This is what makes AI in defence more expansive than drones and weapons. It is shaping not only what happens on the battlefield, but what civilians, media, governments, and adversaries believe is happening. In that sense, AI is influencing both kinetic warfare and cognitive warfare. That same logic is now reshaping battlefield operations.
AI in Hardware and Battlefield Systems
It is no longer just about unmanned systems. It is about autonomous coordination between systems. Ukraine’s Swarmer has deployed battlefield swarm software in active combat 100+ times. Other companies are building modules that can be attached to ordinary FPV drones, enabling autonomous last-mile targeting even in jammed environments. The next leap is drone swarming, where machines do not simply wait for central instructions but coordinate with one another in real time during deployment. One may defend while another attacks. One may reroute based on threat signals from the other. That turns a fleet into a distributed intelligence system, not just a collection of machines.
And none of this works without the stack beneath it.
The opportunity does not sit only at the application layer. It runs far deeper. Infrastructure like edge AI chips, secure cloud, and communications backbones matter. Middleware that allows fragmented military systems to talk to each other matters. Applications built on top of that stack matter too, whether in intelligence fusion, cyber defence, simulation, or autonomous operations. While your point of entry may be the application layer, the long-term strategic value often compounds lower in the stack, and that’s precisely why this theme matters beyond defence-tech specialists.
It is also showing up in who is winning. For decades, military procurement was dominated by legacy primes built around hardware-heavy programmes and long development cycles. That structure is starting to shift. The Anduril $20B Army contract and Palantir’s $10B Army software contract mark a structural turning point: AI-native companies are now winning at the same scale as Lockheed Martin or Raytheon. That matters beyond defence because it signals where strategic value is beginning to accrue. In sectors shaped by software, data, and machine-speed coordination, the winners may increasingly be the ones building the orchestration layer, not just the asset itself.
Where India Can Build
India, too, has a credible opening here. The opportunity set is already visible across a few distinct fronts:
Policy support is becoming more tangible as well. 430 iDEX contracts have already been signed, 619 Indian startups are engaged, and grants of up to ₹25 crore are available for startups building across AI, autonomy, satellite communications, and cyber tech. Defence exports reached ₹23,622 crore in FY2024-25, with a ₹50,000 crore target by 2029.
Why This Matters Now
We are not a defence fund, and we are not underwriting the next generation of missiles or armoured systems. But modern defence capability is no longer being shaped by hardware alone. It is being shaped by intelligence, coordination, compute, and control. For countries looking to build real strategic depth, AI capability must be built the same way: from applications, through middleware, and down to infrastructure and sovereign systems.
