An ode to start-ups in defence

Policy initiatives like Idex have put the defence industry on the path to self-reliance. It is time now to expand and build upon this success to achieve the broader objective of Make in India

The Indian defence industry ecosystem is buzzing with optimism. Stocks of defence companies are soaring with record price-to-earnings ratios, while venture funds and angel investors are vigorously hunting for defence start-ups. Market analysts are ramping up their defence teams. Foreign original equipment manufacturers (OEMs) are knocking on the doors of potential Indian partners for “Make in India” initiatives. From being the world’s largest importer of arms and ammunition, Indian defence exports are growing at a scorching pace, with India having a distinct possibility of becoming one of the top five defence exporters before 2030. 

Prime Minister Narendra Modi’s clarion call to strive for atmanirbharta in defence, backed by unwavering political will, has brought unprecedented change to the sector. Apprehensions that indigenous equipment compromises defence preparedness have been put to rest. On the contrary, it is now acknowledged that genuine defence preparedness is unattainable without atmanirbharta. Outlining his vision during one of the Commanders’ Conference, Mr Modi had said, “When we use imported arms and ammunition, the enemy knows exactly what to expect. But when we use our own, there is the element of surprise”. Surprise is the strongest weapon of war, a fact well-known to all battle commanders.

The desire to become atmanirbhar is not new. It has been the proclaimed goal of the Ministry of Defence (MoD) for decades. Several high-level committees were set up over the years. A new Department of Defence Production was instituted in 1962. Private industry was allowed entry in 2001, but imported equipment remained the mainstay.

It took several big policy decisions between 2018 and 2022 by the Modi government to turn the tide. These included the launch of Innovation for Defence Excellence (iDEX); recharacterising DefExpo and Aero India as platforms to showcase the prowess of Indian defence industry; delicensing and ease-of-doing business reforms; positive indigenisation lists; earmarking of capital procurement budget for domestic industry; earmarking budget for domestic private industry; and the corporatisation of ordnance factory boards. The government also showed determination in not yielding to pressures from “friendly foreign countries” and foreign OEMs who lost business worth billions of dollars in India. The PM’s call was supported by the armed forces, the public sector units (PSUs) and domestic industry. However, what made the biggest difference for me were the start-ups under iDEX.

Developing military technology is not easy. Defence R&D is capital-intensive and time-consuming. It often takes years to develop a new system, followed by additional years of testing before it can be deployed by the military. In this backdrop, it was a bold decision by the government to start iDEX and ask start-ups to solve military needs.

Launched in 2018, iDEX turned out to be a game-changer and a big transformative force. A country accustomed to seeking technology had a pleasant surprise in 2019 when a top US defence lab showed interest in collaborating with an Indian start-up. In 2019, a Noida-based start-up sold drones designed and developed by it to Northern Command — a first for the country. Another start-up took up the challenge of making 10-megapixel cameras, which had been imported at an exorbitant price for years. They not only successfully built such a camera, but also offered to make a 1-gigapixel camera, something that even leading countries did not have. Yet another start-up developed the 1,000 drone swarm show for the 2022 Republic Day celebrations at a cost that a foreign vendor had quoted for a single show, and they achieved this in just about four months. Military problems presented before start-ups were solved in 12 to 18 months and at a fraction of the cost, not hundreds or thousands of crores. The maximum assistance given to a start-up was less than Rs. 1.5 crore. Each start-up brought in a matching contribution, and some even brought more. These start-ups were driven by the pride of serving the Indian Armed Forces and the nation. 

iDEX had many other second-order benefits. It instilled confidence in India that we could do it. The solutions developed by the iDEX start-ups were as good or better than the best-in-class, especially they excelled in emerging technology areas like artificial intelligence, quantum computing, and drones. For example, QNu Labs developed Quantum Key Distribution over fibre, and achieved distances that were 60 per cent higher than the best in class. This confidence spilled over to big industries and PSUs.  Defence PSUs activated their R&D teams and filed over 2,000 patents. A young team of engineers at Mazagon Dock Shipyard sought approval to design and develop a prototype of midget submarine, another first for India again. Scalability was another major benefit. Military equipment consists of thousands of sub-systems, and with thousands of start-ups responding, these could now be taken up simultaneously. Yet another benefit was revelation of collaborative teamwork among diverse organisations of the MoD. iDEX had representatives from the armed forces, DRDO, PSUs , Acquisition Wing, who acted as facilitators, not bosses, and worked together as a family. iDEX also benefited other sectors in need of an indigenous innovation ecosystem, such as railways and Space.

However, the biggest benefit of iDEX is what it means for Make in India. The Indian industry has largely been focused on manufacturing and services. As a nation, we have lagged behind in creating our own products with intellectual property rights. India’s vision to become a developed nation during Amrit Kaal cannot be realised unless we get into making our own products. Through iDEX, India developed its own products for the first time. The real success of iDEX would be if it becomes the precursor of a much larger vision of Make in India 2.0.

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The writer is former defence secretary and distinguished visiting professor, IIT Kanpur