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8 April 2021, Financial Express

A defence start-up ecosystem for India

Following the lead set by the U.S. and Israel, India is now tapping its domestic start-up ecosystem for technological innovation and self-reliance in defence. Indian entrepreneurs are developing niche technologies which will boost the Indian military’s combat capabilities. They are also enabling the much-needed commercial synergy with Silicon Valley venture firms.

Former Fellow, International Security Studies Programme

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India’s start-up ecosystem, which is propelling India’s digital economy, is now expanding its presence in the defence domain. In a sector otherwise notorious for ‘middlemen’ and a less-than-optimal weapons procurement system, start-ups are infusing fresh energy and purpose by innovating niche, cutting-edge technologies for the Indian military. If nurtured properly, these start-ups can  transform India’s military capabilities, achieve technological self-reliance while building much-sought-after investment linkages with the U.S.’ Silicon Valley.

India is  the world’s largest arms importer. This is ironic, since India has long sought self-reliance in defence. Those efforts have yielded very little. Beyond serial licensed production of defence equipment in the defence public sector units, true self-reliance in indigenously designed and developed equipment, has proved difficult In recent years, the ‘Make in India’ initiative has attempted to change this reality by promoting the private sector’s role in defence production and research and development (R&D). The production aspect is yielding slow change, but what has received traction is R&D, with start-ups enthused by the mission  of innovating for Indian military.

In tapping start-ups, India is following the lead set by Israel and the U.S. which, very early on saw and seeded start-up innovation for national security.

In the U.S., the Central Intelligence Agency was one of the first to set up a venture capital firm, In-Q-Tel, in 1999.[1] It provided seed funding to  several start-ups, including big data analytics company Palantir Technologies, which played a crucial role in hunting for and killing the al-Qaeda mastermind, Osama bin Laden. Today, Palantir is hailed as a ‘tech unicorn’ and is a symbolic of the defence innovation base in Silicon Valley and other parts of the U.S. The Pentagon, too, has aligned itself with this trend by establishing the Defense Innovation Unit to work closely with the tech industry and start-ups to shortlist, fund and develop emerging technologies.[2]

Likewise, a thriving defence innovation base in and around Tel Aviv has given Israel a technological military edge in a region surrounded by hostile neighbours.

India only began this journey a few years ago. Today, several start-ups are engaged in developing prototypes and products for the Indian military across various technologies. Notable are ideaForge (drones), Tonbo Imaging (imaging and sensor systems), IROV Technologies (underwater drone) and Axis Biosolutions (surgical and wound care). Among these, ideaForge and Tonbo Imaging are already  significant players with their combat-proven technologies. For instance, ideaForge’s drones for the Indian military and paramilitaries have been used in many surveillance, reconnaissance and counter-insurgency operations.[3] Tonbo’s imaging and sensor systems improve the lethality of munitions and missiles of the Indian military, and have had their systems’ combat-readiness tested by the U.S. Special Forces and Israel Defense Forces.[4]

The government is also tapping the start-up ecosystem through its flagship Innovations in Defence Excellence (iDEX) programme.[5] iDEX works with R&D institutes, academia, industry, start-ups and individual innovators by providing them funding of up to Rs. 1.5 crores to create solutions for the military’s technological problems. Since its launch in 2018, iDEX has been hosting  the Defence India Start-up Challenge (DISC) which  awards start-ups for mentoring and funding, based on their ability to solve specific technological challenges posed by the military.[6] So far, 60 start-ups have been beneficiaries, and iDEX has  identified technologies such as soldier protection systems, secure hardware encryption devices, unmanned surface and underwater vehicles, 4G/LTE tactical local area network, foliage penetration radar, artificial intelligence-based satellite image analysis, among others.[7]

As is the norm with defence R&D worldwide, these technologies are dual-use. For instance, IROV Technologies’ underwater drone being developed with the Defence Research and Development Organisation for surveillance and repair will also have a commercial case.[8] Likewise, Axio Biosolutions, which has created haemostatic dressing – specialised bandages for treating injured personnel in combat, can also be used for similar purposes in any accident or disaster-like situation.[9] These technologies can also be used for  the homeland security products market, currently dominated by Chinese companies like DJI (drone maker) and Hikvision (IoT solutions and video security systems provider).

The evolving  defence start-up ecosystem is enabling a  much-needed commercial synergy between India and the U.S., as many  Indian start-ups have participation from Silicon Valley venture  firms like Artiman Ventures (Tonbo), Accel and IDG Partners (Axio Biosolutions), Intel Capital (Saankhya Labs), WRVI Capital (ideaForge). This will only expand as  India and the U.S. deepen collaboration in defence technology.

One policy change is needed:  reduction of the  lengthy defence acquisition procedure, which typically takes seven-to-eight years for major weapons. Longer timelines don’t fit with start-up business models, neither they will be appropriate given the rapid pace of technological obsolescence. The government will need to devise and enforce shorter timelines commensurate with the start-up culture.

The government has correctly internalised the global technological trend. Now it needs to execute it.

A part of this article was first published in Financial Express.

Sameer Patil is Fellow, International Security Studies Programme, Gateway House.