Technology start-ups likely to be beneficiary of indigenisation move

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Technology start-ups likely to be beneficiary of indigenisation move
Technology start-ups likely to be beneficiary of indigenisation move

In making the country independent in defense technology, not only well-known companies, but also start-ups are also increasingly playing a significant role

Geopolitics’ tectonic plates are beginning to shift. The rifts of globalization have been opened by the on-going Russian-Ukrainian conflict. And the most important lesson for countries is independence as a nation, especially in critical areas. The largest arms importer with 11% of total world imports – India has a critical dependence in the defense sector on countries such as Russia, France, Israel and the US, among others. While the war in Ukraine is alarming because of the need for independence on defense technology, India’s efforts to indigenize have gained momentum.

India has so far published three negative import lists, which include 310 items that will now be produced in the country. Interestingly, the list is exhaustive. India has embarked on an ambitious journey to build a huge military engineering infrastructure over the next decade from platforms such as Naval Utility Helicopters (NUH), UAVs at medium altitude (MALE), light tanks and unmanned underwater vehicles to high-quality sensors such as multifunction radar surveillance, tracking and guidance (MFSTAR), various missile systems.

Also, for Indian industry, business opportunities are essential. It is estimated that in the next five to seven years about 2.10 lakh rupees orders for defense equipment will be placed in the industries of India. As technology is an important component of every military technique, the Indian technology industry – engineering services companies, Information Technology (IT) services firms and technology start-ups – is likely to be a huge beneficiary of the indigenisation move.

“Indian IT firms, including engineering companies, have never been aggressive towards government contracts in the defense space for a variety of reasons. However, this is likely to change as the government makes concerted efforts to “produce in India” defense equipment. In addition, the market opportunities are huge”, said Pareh Jain, an engineering services consultant and founder of Pareekh Consulting.

“Moreover, large corporate houses such as Tata, Mahindra and L&T are betting big on India’s defense sector. Therefore, it will be natural that these companies will provide support from the relevant companies of the group (for example, TCS, Tech Mahindra, LTTS) to implement the software part”, he added.

The role of Indian firms and start-ups:

Analysts also noted that the local ecosystem is likely to revitalize by the Indian government’s focus on technology transfer (ToT) with global defense firms. It should be noted that DRDO (Defense Research and Development Organization) has concluded more than 1430 ToT agreements with Indian industry, of which 450 have been signed in the last two years.

Indian engineering companies such as L&T Technology Services, Persistent Systems, Cyient, Tata Elxsi, along with all major Indian IT services companies, are currently collaborating with many global defense giants in the US and Europe. Many believe that such a policy will help these companies better enter the domestic market.

“Previously, the trend was that complex technological work, requiring niche systems and software development skills, was mostly done outside the country, but with this policy shift combined with increased public-private partnerships some of the high-end engineering projects are being implemented from India and this trend will only grow. Indian engineering firms can offer solutions such as digital engineering, systems engineering and avionics that provide higher, faster and safer product performance and can help further modernize the country’s defense sector. The day is near when Indian engineering companies will be able to incorporate. Made in India for the defense sector”, said Amit Chadha, CEO and Managing Director of L&T Technology Services (LTTS).

In making the country independent in defense technology, not only well-known companies, but also start-ups are also increasingly playing a significant role. Since this year’s budget 25% of the defense research and development budget has been reserved for industry, start-ups and academia, it is expected that this will give a big boost to innovation.

“Many advanced technologies are not available to protect against global companies, this opens up huge opportunities for India’s semiconductor start-ups and technology companies. Start-ups like Astrome, Idea-Forge, Botlabs, and some of them, are developing very good technologies that can be used successfully in the strategic sector”, said Dr. Satya Gupta, President of the Indian Society of VLSI and Advisor to the Indian Electronics Association and He added that an initiative such as iDEX is a great start to increasing the participation of start-ups in the defense technology sector.

Hybrid warfare:

As the future war will be a hybrid with cyber-attacks, which will be a key part of the war, it also opens up significant opportunities for start-ups, cyber-security companies and Indian IT firms that can develop concrete solutions to thwart such attempts. “We are seeing an increase in cyber-security threats in the US and Europe due to the on-going conflict between Russia and Ukraine. As any future war will have a significant cyber component, the involvement of public and private businesses with the support of start-ups could allow India to develop and develop India-specific cyber-security solutions”, said Sanjay Dahivadkar, Founder and CEO of ITShastra, IT Services Company in Pune.

It is expected that in the coming years the global order will see significant changes. India as a medium-sized state with two neighbours that have nuclear weapons has no luxury to depend on any other country in matters of critical defense technology. As the war in Ukraine shows, every nation must wage its war alone.

Thus, it is better to implement our defense technologies at a faster pace than to put our national security hostage to the whims of other countries.

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