India's Deep Tech Revolution In Difence: From Startups to Global Impact

NewSpace Research & Technologies (NRT), an Indian pioneer in drone technology for the defense sector, has recently secured a significant $52 million in funding, marking a pivotal milestone in its journey. This funding was obtained through a bridge round, including $33 million from marquee investors and $19 million in loans from SBI's startup hub and SIDBI, showcasing strong financial backing and confidence in NRT's capabilities.
April 13, 2024 | 17:49

NRT's trajectory is marked by notable achievements and groundbreaking innovations. From delivering cutting-edge swarming drone systems, including a tethered drone system, to the Indian defence ministry and setting records with multirotor systems reaching unprecedented altitudes, NRT has demonstrated its prowess in the defence and aerospace sectors. Its latest innovation—a solar-powered UAV with an impressive 21-hour flight duration—is a clear indication of its commitment to technological advancement and operational excellence. With ongoing projects for the Indian Army and ambitious plans to achieve billion-dollar status within five years, NRT emerges as a formidable contender in the global defence technology arena.

Beyond its domestic successes, NRT's strategic vision extends to international markets, with impressive showcases in Japan and aspirations to expand into key regions like the Middle East and the US. Its swarm drones, utilized for disaster management in Japan, highlight the real-world applications and global relevance of NRT's technology. This ambitious outlook, coupled with a focus on becoming a major player in the rapidly evolving drone industry, positions NRT as a company to watch, poised for significant impact and growth on a global scale.

India has experienced a boom in drone startups over the past decade, fueled by the growing popularity of drones. This surge in demand is evident in a market expected to reach $13 billion by 2030, a significant increase from $2.71 billion in 2022. Leading this charge are startups like Garuda Aerospace, Marut Drones, BonV Aero, Skylark Drones, Skye Air Mobility, and Preimage. Recognizing the immense potential, the government is actively supporting the industry's growth with the aim of making India a global drone hub by 2030. Initiatives such as "Make in India," relaxed defense procurement policies, and programs promoting innovation like iDEX are fostering a strong ecosystem for both startups and established companies. Investors share this optimism, anticipating that these advancements will lead to impactful technologies used worldwide.

India's booming tech startup scene is now making its mark in the defence industry. This sector has traditionally been known for its reliance on middlemen and a complex procurement system. However, startups are bringing a breath of fresh air by developing innovative and specialized technologies for the Indian military. With proper support, these startups have the potential to revolutionize India's military capabilities, reduce dependence on foreign technology, and even attract investments from the world's tech hub, Silicon Valley.

India ranks third globally in military spending, accounting for 3.7% of the world's total in 2022. This translates to $76.6 billion, following the U.S. at $801 billion and China at $293 billion. India also boasts a massive military force, the second-largest in the world, with 1.4 million active personnel and 1.3 million in reserve across its army, navy and air force. Despite this significant spending, which consumes nearly 2.4% of India's GDP, a key question remains: what portion of this military expenditure comes from domestic sources?

India's defence manufacturing sector is undergoing a positive transformation. Established companies and new players are both getting ready to take advantage of the growing opportunities in defence and aerospace. This surge in interest is fuelled by the government's plan to invest heavily in modernizing the military, with an average of ₹1.5 lakh crore allocated annually until 2030.

To further boost domestic production, the Ministry of Defence has introduced a series of "positive indigenisation lists." These lists outline hundreds of defence items that must be domestically sourced, thereby promoting local companies and facilitating technology transfer with international manufacturers. This strategic initiative has significantly bolstered domestic investment and capacity building within the defence sector.

It is no surprise, therefore, that the recent Indian Defence Budget prioritizes deep technology investments. This aligns with the government's "Aatmanirbharta" (self-reliance) initiative. Similar to other countries like the US, France, and Germany, India is looking to its deep tech startups for innovative solutions in defence. These cutting-edge technologies, including Artificial Intelligence (AI), robotics, and augmented reality, hold immense potential for strengthening military systems and security infrastructure. With the nature of warfare evolving in India's region, investing in these technologies now is a strategic move. It will not only give India an edge over its adversaries but also prepare it for the future of warfare.

Advances in deep technology are revolutionizing modern warfare. Militaries around the world are embracing robotics, drone swarms, artificial intelligence, and even brain-machine interfaces to improve their strategic and tactical capabilities. These technologies can automate logistics, enhance planning and force projection, and create "augmented soldiers" with superior battlefield awareness. Additionally, innovations in drones, quantum computing, and hypersonic weapons provide a crucial edge against adversaries. Even smaller countries like Ukraine are recognizing the potential of these disruptive technologies.

India's commitment to deep tech aligns seamlessly with the "Atmanirbharta" (self-reliance) objectives delineated in the recent defense budget. By fostering domestic innovation, India can diminish its reliance on imported weaponry. The government's incentives can spur startups to craft solutions tailored to India's requirements, spanning from AI-driven satellite analysis and logistics drones to secure quantum communication systems. Deep tech innovations can effectively tackle India's distinctive geographical challenges through advancements in rugged electronics, cold-weather gear, and other survival gear. Moreover, technologies like lethal autonomous drones and high-altitude sensors confer substantial military advantages sans the need for costly platforms.

The recent government budget aligns well with programs like Innovations for Defence Excellence (iDEX), which began in 2018. iDEX provides grants, incubation support, and problem statements from the armed forces to startups, fostering innovative solutions. To strengthen this, the Defence Ministry has allocated nearly INR 500 crore for iDEX over the next five years, managed by the Defence Innovation Organisation (DIO), to boost domestic defense technology innovation among startups, small and medium enterprises, and individual inventors.

The budget's focus on deep tech investments enables iDEX to expand beyond traditional engineering products. Leveraging this emphasis on cutting-edge technologies, iDEX can support startups in emerging fields like artificial intelligence, quantum computing, and nanotechnology, transcending traditional defence manufacturers.

The Indian government promotes domestic defence startups through "Make in India" and iDEX, creating a level playing field. "Make in India" enhances domestic defence production, prioritizes Indian-manufactured products in government procurements, and bans importing certain defence equipment, offering opportunities for startups and established players alike. Moreover, specific components imported by state-owned defence firms, valued at nearly $5 billion annually, are earmarked for domestic production, further benefiting startups in the defence sector.

India's Defence Minister Rajnath Singh inaugurated the ADITI scheme on March 4, 2024, as part of the iDEX initiative, aimed at enhancing defence technologies and fostering innovation. Collaborating with the Defence Innovation Organization (DIO) and the Department of Defence Production (DDP), the scheme seeks to augment the defence sector. At the DefConnect 2024 event, Singh emphasized the importance of advancing defence technologies to propel the nation forward, fostering innovation, and nurturing a knowledgeable society. With a budget of INR 750 crore, the ADITI scheme not only offers grants to eligible startups and innovators but also encourages their participation in enhancing the country's defence capabilities. By offering grants of up to INR 25 crore, the scheme incentivizes young entrepreneurs and innovators to contribute to defence technology research and development, ultimately aiming to bolster India's technological and national security.

This initiative aims to develop 30 critical and advanced deep technologies that address the specific challenges and needs of the military. The program concentrates on several key areas: Cybersecurity and Encryption, Unmanned Systems, Artificial Intelligence (AI) and Machine Learning, and Advanced Materials and Composites.

In conclusion, Indian startups are increasingly significant in defence exports due to their development of innovative solutions that meet the evolving demands of the global market. Government programs supporting exports enable startups to collaborate with foreign companies, showcase their capabilities, and contribute to global security. With ongoing government support and collaboration, Indian startups are poised to become a major force in shaping the future of the country's defence industry. This drive for self-reliance, encapsulated in Atmanirbhar Bharat, is not merely a dream but a collaborative effort where startups lead the way towards a new era of self-sufficiency and technological advancement.

Tarah Nguyen
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