Defence Tech’s Tipping Point

THE TAKE 

Drones Are Just the Beginning, India’s Private Sector Must Step Up Now

Many drone enthusiasts began by using their drones — built or imported — for simple tasks like taking pictures, shooting video, and eventually moved on to mapping and real-time surveillance.

Ankit Mehta and his co-founders launched Mumbai-based IdeaForge with roughly the same objectives about 20 years ago. All of them are IIT Bombay graduates or postgraduates who have combined passion with commercial ambition, achieving a fair degree of success, including an IPO two years ago.

But when terrorists attacked Mumbai in 2008, Mehta and his colleagues realised drones could serve far greater purposes. And so began a journey that increasingly aligned with the needs of both law enforcement and, in recent years, defence applications.

Today, IdeaForge says its dual-use (civil and defence) unmanned aerial vehicles have completed over 650,000 flights, one taking off every three minutes from their factories.

The Long Flight Of Indian Drones

If the 2008 terror attack changed the trajectory of Mehta’s company, the recent terrorist attack on Indian civilians in Kashmir is likely to trigger even deeper shifts, not just for IdeaForge, but for a wider set of companies and sectors.

There have been at least three new categories of battleground developments in the latest conflict between India and Pakistan.

First is the active use of drones, serving, in many ways, as a substitute for aircraft and traditional aerial warfare. Globally, many countries are already moving toward inducting more drones. 

Perhaps the most visible example is Ukraine, where young people are literally soldering and assembling drones, then sending them, with deadly payloads, towards Russian forces.

The second is cybersecurity. India has been facing a surge in cyberattacks on both its infrastructure and financial systems.

The third is misinformation, or psychological operations. 

A recent paper by researchers at the Observer Research Foundation concludes that hacktivists from Pakistan have targeted India’s defence-related organisations and state-owned enterprises with distributed denial-of-service (DDoS) attacks. India’s financial sector has also been seen as a key target.

The government’s Computer Emergency Response Team (CERT-In) issued an advisory highlighting the risk of cyber threat campaigns specifically aimed at Indian organisations. 

The Bombay Stock Exchange (BSE) confirmed the threat in a statement two weeks ago. In response, both the BSE and the National Stock Exchange restricted foreign access and initiated enhanced cyber risk monitoring.

While these advisories and threat responses are unusual, India’s financial system is generally under constant attack, at some level or another.

The Invisible War Around Us

In my conversations with Chief Technology Officers, most—if not all—such cyberattacks are never disclosed publicly, for obvious reasons. 

But the effort to thwart these attacks, which could slow down or freeze critical systems, including UPI which a great part of India’s transaction economy depends on, is relentless.

Herein lies the opportunity.

Both in the case of drones and cybersecurity, there is a far greater need for private sector participation and entrepreneurial involvement in national defence than perhaps ever before.

While the private sector is already playing a growing role in areas traditionally reserved for the government—from aerospace to space technology and, more recently, defence—the scale of opportunity that lies ahead is of a significantly greater magnitude.

And I would argue that this opportunity has only truly revealed itself in the past few weeks, and in ways we did not anticipate.

A Call For Private Innovation

The latest conflict on our borders has made it clear that not only have new threats emerged, but that countering them will require skills and innovation that cannot come from within the system alone.

Neither governments nor traditional defence technology companies alone are equipped to meet these demands. 

Bridging the gap between India’s innovation potential and the evolving requirements of the modern battlefield—whether in advanced drones, cybersecurity, or countering misinformation—will require sharper focus than we’ve seen so far.

This is also a unique opportunity to tap into our homegrown talent more broadly and effectively—not only to prepare for the next war, but also to unlock economic growth by creating new jobs and enterprises in the process.

CORE NUMBER

Rs 18,620 crore

That’s how much foreign portfolio investors (FPIs) have poured into Indian equities so far in May 2025, according to depository data reported by PTI. This follows the Rs 4,223 crore net inflow recorded in April, which marked the first month of FPI investment after three consecutive months of withdrawals. Before that, FPIs had pulled out Rs 3,973 crore in March, Rs 34,574 crore in February, and Rs 78,027 crore in January. Despite this rebound, the total equity outflow in 2025 still stands at Rs 93,731 crore. Analysts say improving global cues and a ceasefire with Pakistan have lifted foreign investor sentiment toward India.

Loan Before the Line. With just days left to meet a key insolvency deadline, Bajaj Auto’s European arm has secured a €566 million (Rs 5,390 crore) loan to help fund KTM AG’s restructuring plan, Bloomberg reported. KTM must deposit €544 million by May 23 as part of its agreement with creditors, who accepted a 70% haircut. Bajaj, which began backing KTM in 2007 with a 14.5% stake, now owns a 49.9% stake in KTM through its parent company PTW Holding (now Pierer Bajaj AG). The fresh loan, arranged with JPMorgan, DBS, and Citi, comes as Austria’s largest bike maker struggles post-pandemic amid weak demand and high energy costs.

Phones for you! And for you! In FY25, India’s smartphone exports surpassed the country’s top goods like petroleum and diamonds, according to government data cited by a Business Standard report. That figure increased by 55% from FY23, and is now at $24.14 billion. Last month, reports pointed out that Apple assembled iPhones worth $22 billion in India last year; Samsung is reportedly moving its production facilities from Vietnam to India too. The Modi government’s ‘Make in India’ project, which includes production-linked incentive schemes, are one reason why companies are setting up shop in India, though critics argue that India serves primarily as a hub for assembly rather than manufacturing.

US Remittance Tax Burdens. US President Trump has proposed ‘A Big, Beautiful Bill Act’, which includes tax breaks, spending cuts, and more money to the Pentagon and to border security. In addition, it proposes a 5% tax on remittances that non-citizens based in the US send home. That tax could particularly impact Indian households, which receive $120 billion in remittances each year, of which 28% come from the US, according to The Economic Times. It could also impact the value of the rupee, and compel the RBI to to intervene to stabilise the currency more frequently.

SMEs Line Up For Manufacturing. The Indian government's Rs 22,805 crore Electronics Component Manufacturing Scheme has garnered significant interest, with 70 applications received within just 15 days of its launch. Though big players like Tata Electronics, Dixon Technologies, and Foxconn have applied for the scheme, Union Minister Ashwini Vaishnaw said that 80% of the applications came from small and medium enterprises (SMEs). This scheme aims to reduce India’s dependence on China and the country’s serious demand-supply gap in electronic components, which some studies project will reach a $248 billion deficit by 2030.

👥 THE TEAM

✍️ Zinal Dedhia, Salman SH, Kudrat Wadhwa | ✂️ Rohini Chatterji | 🎧 Joshua Thomas