Mumbai: Investment firm Carlyle is set to invest ₹1,175 crore ($125 million) for a controlling stake in Micropack, an electronics parts maker for the defence industry, said people aware of the development. This sharpens its focus on homegrown manufacturing opportunities with the aim of scaling them up.

Once complete, this will be the first acquisition in the Indian defence technology space by a bulge-bracket private equity firm.

Carlyle will buy 60% upfront but will reduce ownership in phases, depending on certain financial milestones being met, while retaining a minimum 51% stake. The residual equity will remain with the existing management and founder V Sreekar Reddy, who's managing director.

Fast-growing Sector

The PE group will be joined by a consortium of co-investors such as Yali Capital, a venture capital fund that backs early-stage deep tech companies in semiconductors, robotics, genomics, aerospace and AI; and Mathew Cyriac of Florintree. Cyriac has been one of the most successful investors in India’s fast-growing defence equipment sector.

Bengaluru-based Micropack is a leading manufacturer of printed circuit boards for defence, space, avionics, telecom, medical and industrial electronics, serving customers such as Isro, DRDO and Data Patterns, among others, with defence and avionics being its most important segment. The company is expected to have posted ₹250 crore in FY26 revenue and Rs100 crore ebitda. The last available financial data pertains to FY25.


Between FY21 and FY25, revenue rose 20% while profits advanced 29%, according to figures from data intelligence platform Tracxn. The company’s manufacturing plant is also located in Bengaluru.

Reddy didn’t respond to queries. Carlyle declined to comment. Yali Capital and Cyriac were unavailable for comment.

Globally, Carlyle has been an active backer of manufacturing companies that feed into the defence and industrial infrastructure ecosystem. Across three decades, it has deployed $12 billion behind companies such as Booz Allen Hamilton, StandardAero, Two Six Technologies, Loc Performance, Allison Transmission, and Axalta. Earlier this year, the Washington DC-based fund announced the launch of a middle-market aerospace, defence and industrials investment unit as it sought to leverage the current wave of military spending and focus on resilient supply chains.

Retired General Byran Fenton, who previously headed US Special Operations Command, will join the firm as an operating executive, the company had said. He will focus on sourcing and evaluating investments and working with management teams and industry stakeholders.

India has significantly expanded its defence spending to strengthen military preparedness, modernisation, and indigenous manufacturing capabilities. The overall FY27 defence budget of ₹7.85 lakh crore reflects the government’s sustained focus on national security and strategic self-reliance. Capital expenditure has risen sharply from ₹94,587.95 crore in FY15 to ₹2.19 lakh crore in FY27.

For India's defence technology sector, 2025 saw the highest-ever annual capital inflow of $247 million (₹2,270 crore), according to a Tracxn report. The sector’s cumulative funding milestone has reached $711 million (₹6,535 crore). Technologies developed for military applications now routinely find commercial markets in areas such as autonomous vehicles, precision agriculture, telecommunications, and enterprise security driving up investor interests. India’s defence forces remain a large anchor customer with deep pockets, mandated to source from domestic startups via programmes such as Innovations for Defence Excellence (IDEX) and import bans.

A recent Inc42 Investor survey also showed advanced hardware and technology as a big investor theme, second only to AI across both early and growth categories.