Union Budget 2022: R&D, Manufacturing Opened Up For Defence Tech Startups

Looking to reduce the reliance on imports in the defence sector, the government will allocate 68% of the capital procurement budget, up from 58%. Defence research and development (R&D) will be opened up for industry, startups and academia, with 25% of the defence R&D budget earmarked for this.

Private players will be encouraged to take up the design and development of military platforms and equipment in collaboration with DRDO and other organisations through public-private partnerships. A nodal body will be set up for testing and certification of these indigenous platforms.

Defence, artificial intelligence (AI), geospatial systems, drones, space economy, genomics & pharmaceuticals and clean mobility have immense potential to achieve sustainable development and offer employment to millions. The government will enable development in these sectors through focussed efforts, the finance minister added.

Last year, the government had announced budgetary support of INR 498.8 crore to Innovations for Defence Excellence (iDEX)-Defence Innovation Organisation (DIO) for the next five years. The scheme was put in place to financially support MSMEs, startups, individual innovators and 20 partner incubators in the defence tech space.

Defence Tech Startups On The Rise

Acting on its ‘Make in India’ vision, the BJP-led government has introduced several measures to power local defence manufacturing and explore linkages between the public and private sector. According to a statement by the Ministry of Defence in September 2020, around 11,000 MSMEs were already engaged as vendors in supplying defence-related goods to Ordnance Factory Board and defence PSUs.

The procurement of defence-related goods and services by the government from micro and small enterprises (MSEs) increased marginally by 2.2% to INR 9,293 Cr in FY21 from INR 9,090 Cr in FY20 after declining from INR 12,112 Cr in FY19.

Currently, 194 defence tech startups are innovating under the government’s ‘Startup India’ mission. Of these, more than 50 are developing new ‘fit-for-military-use’ technologies and products under the government’s initiative, ‘Innovations for Defence Excellence’ (iDEX). These startups are trying to find solutions to the various problem statements that iDEX puts forth in its Defence India Startup Challenges (DISC), ranging from individual splinter-proof protection suits to real-time positioning systems.

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