Govt Launches Defence India Startup Challenge To Close Ranks With Indian Startups, Disrupt Sector

The way to the future is through technology. And the path to innovation in technology leads through startups. The Indian government, having realised this, launched its Startup India mission in 2015, and has since been promoting startups across sectors and trying to addressing issues relating to them at various levels.

Now, with a view to leverage defence-related startups and strengthen their collaboration with the defence forces — the Indian Army, Navy, and Air Force — minister of defence Nirmala Sitharaman launched the Defence India Startup Challenge on August 4, 2018.

A joint initiative of the Atal Innovation Mission, the Department of Industrial Policy and Promotion (DIPP), and the Defence Innovation Organisation (a ministry of defence initiative), the Defence India Startup Challenge is looking for startups to innovate in 11 categories.

The initiative comes soon after Prime Minister Narendra Modi announced the Innovations for Defence Excellence (iDEX) scheme during the DefExpo in April, with the vision to build an ecosystem of innovation and entrepreneurship in India for the defence sector.

Along with the challenge, the defence minister also launched a number of initiatives to support startups working in defence areas and increase their engagement with the Indian forces, with the overall objective of making India self-reliant when it comes to meeting its national defence requirements.

“We want a lot of things to get disrupted,” said Sitharaman about the challenge, adding that India has been developing a plethora of new technology solutions in defence by incorporating the latest technologies. “We have indigenised a lot of things; however, the idea remained elsewhere. With iDEX and the Defence India Startup Challenge, an effort is being made to indigenise everything in defence.”

More On The Defence India Startup Challenge

The challenge is open to the DIPP-recognised MSMEs and startups in the below 11 categories.

Further, a support framework kit named SPARK — Support for Prototype and Research Kickstart (in Defence) — has also been launched to enable startups to participate in the challenge. Under this framework, the Defence India Startup Challenge will call for proposals to address the specific technology needs of the Indian Defence Establishment.

Applicants showing the capability, intent, and promise to be able to produce functional prototypes or to productise existing technologies will be awarded up to $220K (INR 1.5 Cr), strictly on a milestone basis in the form of grant, equity, debt, or other relevant structures.

The incentive will be distributed through the Defence Innovation Organisation (DIO), a non-profit joint venture company, formed last year between public sector units (PSUs) Hindustan Aeronautics Limited (HAL) and Bharat Electronics Limited (BEL), at the initiative of the Ministry of Defence. The DIO aims to disburse/channelise the Defence Innovation Fund (DIF) to startups and MSMEs according to various initiatives being taken by the ministry.

Announcing the incentive and incubation facilities being extended to startups with a view to strengthening the Indian defence startup ecosystem, Dr Ajay Kumar, secretary, defence production, ministry of defence, said, “We understand the language startups speak is different from ours. However, it must be noted that the world over, innovation is no more the stuff of corporates and large organisations; now, innovation belongs to tech-savvy startups with agility.”

“Steps are being taken to merge the existing gap between us and startups. These initiatives will take the engagement that we have initiated with startups to the next level,” added Kumar.

The shortlisted startups will also be provided incubation facilities through the Atal Innovation Mission’s incubation labs. Under the Atal Innovation Mission, around 100 incubation programmes have been launched with a capability to accelerate 5,000 startups.

Framework for iDEX Partners

The defence minister also launched a framework for iDEX partners. As part of this framework, iDEX envisages working with India’s innovation entities such as incubators that can help in the discovery and exploration of defence startups and MSMEs, thereby helping in the co-creation of innovative defence technologies.

During the launch event organised last week in Bengaluru at the 91springboard coworking space, five incubators — Centre for Innovation Incubation and Entrepreneurship, IIM Ahmedabad; Society for Innovation and Entrepreneurship (SINE), IIT Bombay; T-Hub, Hyderabad; FORGE, a branded incubation enterprise launched by the Coimbatore Innovation and Business Incubator (CIBI); and IIT Madras — signed MoUs with the Defence Innovation Organisation and were given certificates of partnership for helping the ministry of defence in discovery and mentorship startups and MSMEs.

What Is iDEX?

India is currently the largest arms importer in the world, according to data released by global think-tank Stockholm International Peace Research Institute. Experts suggest that India is expected to spend around $220 Bn in the coming decade to modernise its armed forces.

The Centre, with the intent of encouraging innovation and entrepreneurship in the Indian commercial ecosystem, has launched a host of latest initiatives such as Make In India, Startup India, Atal innovation Mission, and Digital India. It is looking to support innovation and manufacturing in defence as well.

Recognising startups as the flag bearers of latest technologies that even Indian defence forces need to acquire and customise, the Centre, in July last year, established the Defence Innovation Fund and created a roadmap for an innovation ecosystem in defence called iDEX, as part of its special effort to bring startups in the defence loop.

According to the IDEX operationalisation plan, the establishment of the DIF and the iDEX is aimed at creation of an ecosystem to foster innovation and technology development in defence and aerospace by engaging industries including MSMEs, startups, individual innovators, R&D institutes, and academia. The government plans to provide them with grants/funding and other support to carry out R&D development in solutions that have a potential for future adoption to Indian defence and aerospace needs.

The core objectives of the Defence Innovation Fund are:

1. Facilitation of rapid development of new, indigenised, and innovative technologies for the Indian defence and aerospace sector, with a view to meet needs for these sectors in shorter timelines
2. Creation of a culture of engagement with innovative startups to encourage co-creation for defence and aerospace solutions
3. Fostering a culture of technology co-creation and co-innovation within the defence and aerospace sectors

Meanwhile, iDEX will aim to perform these three critical functions:

1. Co-innovation/co-creation aimed at discovery and exploration of existing technologies, or development of relevant technologies
2. Piloting of candidate technologies on important platforms, with quick feedback to innovators
3. Indigenisation of various defence and aerospace-related platforms being manufactured in the country based on ToT (Transfer of Technology)

iDEX will thus facilitate the creation of networks and structures that not just provide the policy framework for this collaboration between the defence sector and startups, but also encourage activities and events that actually get this partnership going and make it effective.

Promoting Defence-Related Startups Under Make-II Procedure Of DPP 2016

Nirmala Sitharaman also laid out a framework to promote defence-related startups under the Make-II procedure of DPP 2016 (Defence Procurement Process, 2016).

Under this framework, projects with an estimated cost of prototype development phase not exceeding $440K (INR 3 Cr) have been reserved for startups; no separate technical/financial criteria are defined on their participation.

Startups are also encouraged to propose projects, suo moto, which, if found suitable as per the criteria laid out for such proposals, will get funding and other support under the Make-Il procedure.

Breaking Barriers In Indian Defence

The Defence India Startup Challenge launch heralded many firsts. For the first time in the history of Indian defence, the lengthy, tedious L1 defence procurement process was bypassed to give Bengaluru-based IoT/ML/AI startup Tonbo Imaging a Certificate of Accord of ‘Approval in principle’ for its suo moto proposal for the Night Fire Control System for AGS-30. Tonbo Imaging is backed by Artiman Ventures, Qualcomm Ventures, and Walden Riverhood Ventures.

Defence minister Nirmala Sitharaman has been at the forefront of strengthening the startup ecosystem in India, and not just in the area of defence. The Startup India initiative by the DIPP too was launched when she was heading the ministry of commerce and industry portfolio, back in 2015. Her subsequent appointment as India’s second woman defence minister in September 2017 also reflects her existing synergy with the Indian startup ecosystem. It’s worth noting that the process of building policies for the Indian defence startup ecosystem too started exactly a year ago when she became the minister of defence.

Before Sitharam took over the defence portfolio, the ministry had been receiving flak over a number of issues: the slow/backseat production of HAL-developed light combat aircraft Tejas; the Rafale offset contracts; declining defence expenditure — the lowest since 1962 (in terms of GDP) — and a number of others.

Controversies aside, with these initiatives — the Defence India Startup Challenge, iDEX, DIF, and promoting startups under DPP 2016 — Sitharaman has undoubtedly addressed one of the biggest unaddressed problems by creating a bridge by setting up the DIF, the DIO and other initiatives to leverage startups for defence innovation.

Apart from the Centre, state governments have also realised the potential of entrepreneurship and are engaging with startups at a much deeper level. The governments of Maharashtra, Telangana, and Karnataka, among others states, have even started boosting startups working with blockchain technology, which is still in a nascent stage in India. Also, when it comes to startups-government collaborations, Rajasthan has been leading the charts and has been continuously working with startups to improve the lives of the people in the state.

The Rajasthan government launched the Challenge for Change initiative in August 2017, wherein it called in startup ideas to improve upon the government processes as well as industries of the state. Earlier this year, the Challenge for change initiative called in startup opportunities to improve revenues and employment opportunities in the core industries of the state such as wool, detection of quarry and mine blasts, conversion of barren land to productive land, and more

With $220 Bn expected to be spent on Indian defence requirements, these initiatives by the ministry are sure to accelerate innovation-driven entrepreneurship and business creation through startups in defence. The initiatives will also help address the existing challenges faced by Indian startups — limited availability of domestic risk capital, constraints of conventional bank finance, information asymmetry, and lack of hand-holding support from credible agencies.

Startups looking to take up the Defence India Startup Challenge can click here.