By Dr R Shivaraman
The start-up ecosystem is catalysing growth across every sector of the Indian economy which is poised to reach an ambitious target of USD 5 trillion by 2030. Every industry or sector requires cutting-edge technologies, original ideas, and distinctive strategies to address their business challenges and establish a competitive edge in the market. The defence sector is one such arena that undoubtedly needs to be at the forefront, requiring top-tier services along with unique perspectives to lead the way effectively. As a result, the Indian defence sector has emerged as a pivotal investor, nurturing start-ups that are pioneering new and innovative ideas and concepts, driven by the ingenuity of youthful minds.
In 2018, the government of India launched the Innovations for Defence Excellence (iDEX) initiative that strives to cultivate an ecosystem conducive to innovation and technology advancement in the defence sector. It achieves this by involving start-ups, R&D institutes, academia, industries, and individual innovators. This collaborative effort has not only accelerated the pace of innovation but has also opened doors for start-ups to collaborate with established players in the defence industry, thus creating a robust ecosystem for growth and development.
Demonstrating substantial growth, the iDEX program has received more than 2000 proposals, with significant financial backing provided to around 300 start-ups and MSMEs. This financial support has enabled start-ups to scale their operations, invest in research and development, and bring innovative solutions to market, thereby strengthening India’s defence capabilities.
Addressing the most crucial aspect of achieving self-reliance in warfare, Defence Minister Rajnath Singh recently unveiled a new initiative to finance research and development endeavours undertaken by start-ups, with the government offering funding up to INR 25 crore for innovations tailored to meet the demands of the armed forces.
The scheme, Acing Development of Innovative Technologies with iDEX (ADITI), is aimed at fostering the innovative spirit of the start-ups and helping India achieve technological prowess by addressing various security challenges with land, air and underwater surveillance and even cyber thefts. The Indian defence sector is now not just a consumer of innovation but also a facilitator, encouraging collaboration and partnership between start-ups, established companies, and government agencies. This synergy is crucial for achieving India’s vision of becoming self-reliant in defence production and securing its position as a global leader in defence technology.
Outshining established enterprise companies
With more than 19,400 tech start-ups catering to diverse sectors, including 5,000 initiated in 2015 alone, India’s start-up landscape is poised to surpass 100,000, providing employment to over 3.5 million individuals and generating a market value exceeding USD 500 billion by the end of the decade. India, home to the world’s third-largest armed forces and boasting a substantial defence budget of around USD 34.53 billion, presents a fertile ground for defence start-ups. These start-ups boast risk-taking capabilities, enhanced flexibility, cost-effectiveness, and agility in adopting and leveraging new technologies. Unlike established enterprise companies, Indian defence start-ups can be completely invested in designing innovative security technologies without worrying about growing their existing business. While large enterprise firms may find it challenging to accommodate the dynamically evolving demands of the defence industry, start-ups are entirely focussed on creating breakthroughs with radical innovations.
Moreover, the amount of angel and venture capital invested in Indian start-ups has also increased tremendously in recent years, making them thrive on the back of the high availability of funds and favourable government policies such as Atmanirbhar Bharat and Make in India. With 100% Foreign Direct Investments, start-ups also have the opportunity to delve into joint ventures with larger corporations, tapping into their expertise and capital while initiatives like Start-up India and the Defence Investor Cell by the Government of India further support defence start-ups. These schemes provide funding, mentorship, and a single-window facilitation mechanism, fostering innovation and entrepreneurship in the sector and contributing to the success of Indian defence start-ups globally.
Several defence start-ups have thus made significant contributions that have been embraced by the defence industry of India. A noteworthy example of pioneering start-up solutions catering to Indian defence services include an Unmanned Aerial Vehicle (UAV), which was deployed by the Indian Army for border surveillance, particularly following the cross-border firing incident in Pathankot. Similar examples are being noticed where the start-ups are seamlessly integrating their technology with the strategies of defence sector. Drones are seen as an interruptive force that could alter the entire course of defence strategies.
During the financial year of 2023, investments in drone start-ups in India amounted to nearly USD 50 million, nearly doubling the figure from the preceding year of 2022. Amidst the emergence of powerful technologies, defence start-ups are spearheading the development of ground-breaking and transformative systems. Leveraging Machine Learning and Deep Learning, they are building computer vision algorithms capable of accurately identifying, classifying, and locating drones. Moreover, these algorithms are augmented with Artificial Intelligence to facilitate autonomous decision-making for countermeasures, including signal jamming and more.
With India’s start-up ecosystem teeming with potential and bolstered by a synergy of governmental backing, market prospects, and entrepreneurial zeal, the stage is set to propel defence start-ups forward. Encouraging trends in investment and technological advancement herald a promising future on the horizon for the nation. As India strives to combat security threats, transitioning to Make in India technologies and products from defence start-ups emerges as a pragmatic solution to prepare for challenges across all fronts. Through collaborative efforts between government initiatives and entrepreneurial ingenuity, India’s defence start-ups are not just shaping the nation’s security landscape but also carving a niche on the global stage as pioneers of innovation and resilience.
The author is Director and CTO, Big Bang Boom Solutions.
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