The Indian defence industry is really taking off.

In 10 years to FY26, the country’s military spending has nearly tripled to nearly Rs 7 lakh crore. In December, the government also approved fresh procurement worth Rs 79,000 crore for rockets, missiles, and radar systems, among others.

So when Tonbo Imaging filed its draft papers for an initial public offering (IPO) last month, it seemed like the perfect time to cash in and expand. Except, it’s not.

The Bengaluru-based surveillance and imaging systems maker’s Rs 1,000 crore IPOInc42Exclusive: Tonbo Imaging To File DRHP By August For INR 1,000 Cr IPO is entirely an offer for sale (OFS). There’s no new money for the company. Just an opportunity for its promoters and key investors to cash out, either partially or fully.

It’s not as if the company hasn’t found its footing. In FY25, Tonbo made Rs 470 crore in revenue, a nearly 5X jump from a couple of years ago.

For one, conflicts across Ukraine, Gaza, and Pahalgam had accelerated the demand for the company’s night-vision, thermal, and surveillance equipment, including from the Indian Army, Nato forces, Israel, and the US military.

Two, it’s a gold rush. Defence production in India has crossed Rs 1.5 lakh crore, and the government wants to almost double it in the next three years.

“Programmes like the Future Infantry Combat VehicleAn initiative to modernise Indian Army's mobility and upgrade its firepower and protection capabilities, among others and Future Ready Combat VehicleThe Indian Army’s push for a modern next-generation battle tank, replacing the vintage T-72 fleet are expected to involve a combined outlay of Rs 1.5–2 lakh crore,” said Major General (Retd.) Sanjeev Khanna, who was earlier responsible for maintenance, repair, and overhaul across the Indian Army.

“With the increasing emphasis on sensors, situational awareness, fire-control systems, and networked warfare, opto-electronics and imaging solutions are likely to account for more than 15% of the overall programme cost,” he added.

In simple terms, this is the time companies should be raising money, investing in research, and scaling manufacturing.