The success of Operation Sindoor showcased India’s indigenous munitions and marked the transition of its entrepreneurial image beyond early adolescence. Meanwhile, the Indian government recently released data showing that Indian defence exports have grown thirty-four times in the past ten years. This exponential rise proves that Indian defence exports have gained global traction and carved a niche in the international market. Furthermore, this upward trajectory has seen multiple inflexion points since the inception of the programme in 2014. Though some of these inflexions are observed as major milestones in this journey while many other important ones have gone unnoticed but were worth appreciating.
For example, in 2018, the IAF started a very successful Meher Baba swarm drone competition that triggered the drone ecosystem in India. The programme adjudged its winners post-pandemic. In a separate event last year, the MoD published a note to the industry associations to caution private players to weed out Chinese component sourcing from their bill of materials. The note categorically identified some companies by name. Later, the Indian Army also put on hold its drone procurement due to Chinese sourcing concerns. At least one company was common between the above three communiques. This set of events marked a significant coming of age of the ’Make in India’ programme, an important inflexion point.
Over the years, many technology transfer programmes have been limited to the transfer of product manufacturing alone. However, a true technology transfer takes place when the subsequent future versions of that product can be developed from the transfer itself. The best technology transfer would be the acquisition of a running business unit that makes that technology in a foreign land
In these years, the Make in India programme moved from encouraging the development of drones in India to developing them without cyber and supply chain vulnerabilities. This effort required the entire bureaucratic system across agencies and services to be sensitised and to appreciate and codify into policy multiple tenets for a still upcoming startup programme. Similarly, there are other challenges for which the policies have either already been refined or shall be refined very shortly. A healthy synergistic momentum is observed.
Similar maturity came about in the cohesion across various stakeholders of this growing startup ecosystem. This cohesion hit another inflexion point as the lingua franca of the ecosystem began to standardise across the stakeholders and then started to fine-tune and mature. For example, as the ecosystem matures further, it can be expected that soon there will be further separation in policies for MSMEs and startups. As a rule of thumb, venture capitalists only invest in startups as their investment thesis spreads the portfolio’s risk against the potential ROI of the individual startups. Therefore, more ambitious and riskier but privately funded startups in deep-tech are expected to be established soon. This growth is expected to lead to a better appreciation of the differences between homegrown and open source technologies.
But the big inflexion jump, or more like the Make in India 2.0, would include the expansion of the scope and syllabus of the Aatmanirbhar programmes. To make India a developed nation by 2047, as envisaged by the Prime Minister, this expansion will be demanded. This expansion primarily implies acceleration in the speed of technology acquisition.
India needs PE firms that can compete in the global arena. The PE sector can help accelerate India’s self-reliance and boost exports. PE needs policy support from government regulators, including RBI and SEBI, to play in international markets. Furthermore, a sovereign fund could help take this exercise to the next level
Over the years, many technology transfer programmes for various reasons have been limited to the transfer of manufacturing of the products alone. But a true technology transfer takes place when the subsequent future versions of that product could be developed over and from the transfer itself. In this regard, the best technology transfer would be the acquisition of a running business unit that makes that technology in a foreign land. Such acquisitions usually hit the ground running with an established market and supply chain. These acquisitions primarily occur in two forms. First, when an Indian entity buys a foreign business entity to expand its product line vertically or to expand its market reach. A quick internet search brings up many examples. Second, when a private equity (PE) company makes an opportunistic business acquisition. These PE acquisitions can significantly accelerate the Aatmanirbhar programmes to pace themselves towards making a developed India by 2047. In this direction, the entrepreneurial lingua franca will see a more pronounced differentiation between venture capital and private equity shortly. Over the past decade, as the Indian government incentivised startups with non-dilutive funding and various other sops, the angel investing and venture capital community grew; similarly, once the technology acquisition policies expand, the private equity sector will come into its own.
The most recent example in this regard can be found in Tata’s acquisition of Italian Iveco’s commercial truck business. Along with Iveco’s commercial truck business, Iveco’s Defence Vehicles (IDV) business unit also went on the block. It was bid for by Bain Capital and KPS, two of America’s PE firms, though it was eventually bought by an Italian company. Similarly, during the pandemic, a fighter jet manufacturer in Spain, ITP Aero, was also bought by Bain Capital for about US$1.5 billion. Meanwhile, India continues to strive for an indigenous jet engine and has spent multifold of that amount, in pursuit of its indigenous fighter jet engines.
Today, India needs a presence in such marketplaces. India needs PE firms that can compete in this global arena. Thus, the PE sector can exponentially help accelerate India’s self-reliance across sectors and boost India’s exports as well. Such PE funds do not necessarily need to be sovereign funds, as Indian manufacturing offers multiple advantages today apart from pure labour arbitrage. But PE does need policy support from government regulators like RBI and SEBI to play in those international markets. Furthermore, a sovereign fund could help take this exercise to the next level.
Today, India boasts a vibrant drone manufacturing ecosystem and has an upcoming semiconductor manufacturing ecosystem. Thus, a fully indigenous drone with 100% homegrown components is not a distant dream but an achievable goal with a well-understood pathway
Lastly, the Make in India 2.0 would benefit by further incentivising Indian supply chains and indigenous component manufacturing. The Research, Development and Innovation (RDI) fund of funds, announced recently by the government, aligns very well in this direction to support deep-tech technology manufacturing in India. Turkiye provides a good recent case study in this regard. Turkiye’s Baykar drone manufacturer originally sold drones with key components such as flight controllers, munition racks, and FLIR cameras, all sourced from other countries. But slowly and steadily, Turkiye started to manufacture these components indigenously. Today, India boasts a vibrant drone manufacturing ecosystem and has an upcoming semiconductor manufacturing ecosystem. Thus, a fully indigenous drone with 100% homegrown components is not a distant dream but an achievable goal with a well-understood pathway.
As the Indian ecosystem expands, it is worth appreciating the effort that the traditional ecosystem has endured through the times. Especially innovating through the Pokhran embargoes to keep the Indian defence and space ecosystem going along with ISRO, DRDO and the other defence and civil public sectors.
Thus, to conclude, the Make in India programme stands as a proud testament to India’s resolve towards self-reliance. It has gone through multiple inflexion points and is well ensconced towards further transformations towards Make in India 2.0 that shall propel India into a developed nation by 2047.
The writer has international experience in implementing entrepreneurial ecosystems in emerging technologies. He is also a former member of the National Security Advisory Board. The views expressed are of the writer and do not necessarily reflect the views of Raksha Anirveda
