Defence business whether R&D or manufacturing, runs on trust, the trust built by organizations, companies and individuals among themselves and with the government. Conversely, doubts and untrustworthiness of stakeholders hinder the progress, not only of individuals, companies and organizations but also of the nation as a whole.
The defence technology ecosystem has only one customer, the government. Even the exports have to be controlled by the government for justifiable reasons. Thus, the government has a huge role in expanding the technology ecosystem, whether through demand generation or through policies.
Perhaps realizing this, the government took the major steps of relying on indigenous weapons, indigenous developers and indigenous manufacturers by introducing several schemes like Indigenously Designed-Developed-Manufactured (IDDM); innovation for Defence EXcellence (iDEX) and Technology Development Fund (TDF) and assurance of procurements from successful development partners of these schemes; Development cum Production Partner (DcPP); dedicated national missions in S&T etc.
As a result of these schemes and government’s pronouncement of the policy of ‘Aatmnirbhar Bharat’, the country achieved largest ever defence production and defence exports, approximately Rs. 1.5 Lakh Crore and Rs. 24000 Crore respectively, in FY 2024-25.
The dashboard of the Department of Defence Production is yet to publish the target for defence production for FY 2025-26, while defence exports are projected to grow to Rs. 30000 Crore in the current financial year. Surely, the decision makers must be working out the target of defence production in line with the government’s intention of achieving a target of Rs. 3 Lakh Crore by 2028-29.
Current Scenario
Recent success of indigenous systems in Operation Sindoor, resultant emergency procurements, and the announcement of ‘Sudarshan Chakra’ by Prime Minister have given further boost to indigenous defence technology ecosystem. In contrast to this, the latest geo-security, geo-economic and geo-political environment does not seem to be favourable for India and this may put some spokes in the supply chain.
However, the country has always taken advantage of such situations, for example the era of sanctions post Pokaran 1998. There is no doubt that India and Indians will rise to the occasion once again to build technologies and systems that constitute the supply chain for major weapons systems and platforms. This will require companies to focus on their core expertise and focus on D&E as well as in R&D. It is heartening to see several companies and domain experts coming together to solve the immediate requirements of the country through collaborative approach.
While the emergence of collaborative approach is heartening and should continue, and several companies are taking advantage of it, emergency procurements cannot sustain a company in the long run. Companies will have to make their niche place through R&D. The current world scenario requires identification of lead system integrators; call them national champions of specific technologies/applications if suitable, and channelizing other companies in a tiered structure.
These tiered companies, especially start-ups and MSMEs, have capability to build a resilient supply chain of all types of components, assemblies and systems. Currently, that system does not seem to be in place. South Korea is an ideal country to learn for this where such efforts have led to several fold increase in defence exports. Carrying out such categorization of companies will require robust policy framework and non-partisan attitude in government officials.
It is for the government to decide as to which department should do it within the MoD. It appears that the Department of Defence R&D may be the right department for doing it, since they are the technology experts within the ministry. However, the blurred line between DRDO and the Department, even though beneficial on most occasions, leads to several complications and a proper structuring and staffing may be required.
Aatmnirbharata and Private Entrepreneurship
DRDO has done exceedingly well over the past several decades; it is another matter that people have started acknowledging this only now. New defence technologies, weapons and platforms take time to mature, and this is an international phenomenon, before they are inducted. The incremental upgradation can happen fast provided a proper ecosystem is developed.
Large initial development time is not only due to time taken in design and development. It could also be due to lack of industrial base in new technologies, denial regimes, non-resilient supply chains resulting into concurrent development of component technologies and vendors, non-availability of testing infrastructure resulting into concurrent development of it, non-availability of most suitable materials resulting into experimentation with secondary choices, simultaneous evolution of testing and certification protocols, non-availability of platforms for integration and evaluation, and many other similar factors.
Despite all these odds, DRDO fraternity did extremely important and exemplary work from the 1980s (the decade when the major system-of-system projects were approved) onwards. It is due to these visionary initiatives that the country today boasts of several large, medium and small companies that not only meet national requirements but also of friendly nations. However, nothing remains static. As the national capability evolves, the defence R&D ecosystem of the country must also develop into an aspirational system. This requires several more progressive steps to be taken by the government.
The Way Forward
The first and foremost enablement required by current entrepreneurs is in ease of doing business. The incorporation of the company must happen along with allotment of PAN and GST numbers, start-up registration at DPIIT and Start-up India, and any other registrations considered necessary. Today’s entrepreneurs are mostly bootstrapped; they do not have deep pockets to run from one location to another, spending on fees for chartered accountants for multiple registrations etc. Despite government intentions, the corruption at the grass root has not decreased.
A casual look at public reviews of GST registration processes will be enough for the concerned officials to understand the pain that the general public goes through. Digital Public Infrastructure is being grossly underutilized in many public services, including GST registration, and it is a matter of concern. GST applications can easily be transferred to the correct zonal office, if filed incorrectly, or aggregated centrally for disposal. GST application to GST number allocation takes months putting the young entrepreneurs at avoidable difficulty.
The very fact that the youngsters are taking the difficult path of setting up an R&D or a manufacturing unit and they do not draw any remuneration for months together, requires the government to facilitate these youngsters as technology soldiers of the country.
To the credit of the government, the incubation process has already been simplified. However, many youngsters are not aware of the incubation process and the facilitation it brings to the entrepreneurs. The government may consider deferring the incubation charges for a year or two, even as the charges of government incubators are comparatively less and genuine. This is primarily to conserve resources that can be invested on capability development.
The defence ecosystem requires promotion of business, especially R&D, in contrast to controlling, which is the norm currently. Research and development is an art of exploring the unknown realm of ideas and possibilities. The boundary conditions for these explorations need to be established. National capacity and capability linkage to defence R&D enhances the stake for success under given constraints of geo-security, technology sovereignty, finances and timelines.
If the approval processes become too restrictive and lengthy, or too many reviews are conducted, or an inadequate budget is allocated, the investigators may not find enablement for trying for high hanging fruits. The government processes must ensure that their energy is invested more in pursuing science and technology than in paper work, and convincing the techno-bureaucracy and financial bureaucracy in government.
The times of government-officials-knowing-all have passed. Close cooperation of private industry from India and other countries seem to be taking greater advantage of our higher educational institutions (HEIs) than the government, primarily due to their quick process and favourable interpretation of policy statements by involved individuals.
Defence forces have been conducting seminars and conferences to apprise the audience of their problems and expectations. This is laudable. Several documents are also getting released from the MoD as well as from SIDM that bring out brief problem statements.
While all these speak of the mutual confidence that the defence services and the industry have established between themselves, the new entrants need little more information, e.g. the nodal directorate in SHQs along with their phone number or email id, whether these problem statements are part of iDEX or TDF and therefore whether funding will be available from the concerned directorate of SHQ or from DRDO, DDP etc., the quantity that is likely to be procured on successful development etc.
As also indicated earlier, there needs to be a national aggregator of technologies in the country. The Army Design Bureau (ADB) has already made a commendable effort in respect to the drone ecosystem. One hopes that the data will be shared by ADB for the benefit of all. Similar effort is required in all other technologies/platforms of armed forces, paramilitary forces and police organizations also.
The summary of the way forward is to promote R&D culture in the country as much as possible.
Ye Dil Mange More
There are several new things that one can ask for bringing in more vibrancy in the defence technology ecosystem. Quality inspection and certification, although absolutely necessary for defence systems, is a tedious process currently. Artificial intelligence and Blockchain technology can greatly facilitate the process. Defence start-ups often struggle for funds, at least at seed and series A levels. While several Venture Capitalists (VCs) exist in the country, defence specific investment attracts only a few of them primarily due longer gestation periods. Will the High Net worth Individuals (HNIs) and philanthropists solve this problem?
For India to truly become an aspirational performer in the defence technology ecosystem, the government may consider setting targets of export with respect to world trade volume. Indian exports have consistently remained 2% or less of world arms trade for several years despite, notwithstanding the laudable performance over the last decade and more.
Can we aspire to have 17-18% of world arms trade by 2047 in line with our population ratio, or can we expect to be 3rd largest exporter in line with the size of our economy over the next couple of years? If such a feat is to be achieved, we will require several new initiatives for capability and capacity development. We will need Indian defence technology consulting companies to take advantage of retiring government and industry specialists to mentor upcoming companies.
One such company, Thoughtrons, has recently come on horizon promising to do exactly the same through defence experts and application of AI. We will need a policy framework to absorb so called failures that will allow moon shots to be taken. The government system will require it to be more responsive and promotional. The system must show urgency not only in getting results but also in decision-making and fund disbursals.
Technical and financial bureaucracy should also look at intangible benefits while planning schemes and policies. This will require these individuals of the government to be retrained. The long game between us (the government officials) and them (the Indian public) needs to change to ‘we the people’.
Finally, in the spirit of ‘we the people’, it may not be out of place to expect that only Indian consulting companies be employed by the government department for data collection and analysis, compiling international frameworks and making policy recommendations.
(The author is Former Director General of DRDO; Views expressed are personal)
