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The Collection Wed, 30 Jul 25 |
Multiple stories, multiple perspectives, one theme worth your time—every week. |
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Everyone makes New Year’s resolutions, even India’s defence ministry.
On 1 January, it declared 2025 a “year of reforms”, promising to modernise the armed forces into a “technologically advanced, combat-ready” powerhouse. Over five months and one brief armed conflict later, the ministry finally got moving on a key change.
In June, the ministry kicked off a review of the Defence Acquisition Procedure 2020, a rulebook for military purchases, with the goal of streamlining those procurements. The update is desperately needed.
Right now, adding a new weapon to India’s arsenal can take up to six years. Even India’s defence secretary admits that’s three times longer than it should be.
India’s defence sector is riddled with delays and inefficiencies, no matter how much money is poured in. This year’s defence budget rose by over 9% to Rs 6.81 lakh crore.
Reform can’t come soon enough.
The glacial pace of procurement is just the tip of the iceberg. Even production and delivery suffer from similar afflictions.
Take fighter jets and helicopters as examples. For a long time, only one company in India could make them: Bengaluru-based HAL. The state-run giant is already two years late on deliveries of Tejas MKA1 fighters, so late that the Indian Air Force chief publicly called them out. Then, in May, HAL’s exclusive manufacturing rights were axed. The government has since opened the doors to private firms.
As The Ken’s editor Seema Singh wrote in March 2025, the state-owned company’s easy monopoly may be over.
Trumpism exposes HAL's Achilles' heel: speed
Hindustan Aeronautics risks losing both local and global defense deals as military spending surges worldwide
HAL is active in more than defence manufacturing. It’s been handed a new contract to build and launch two commercial small satellite launch vehicles, or SSLVs, with the help of Isro.
New business is great, but HAL’s track record suggests there could be snags down the road. Since working with SSLVs requires agility, the delays that HAL is known for could impact when its rockets will be available.
HAL, you got the Isro tech. Now don't do a Tejas on small rockets
It's a small fish in a big pond. Will it drown in the ocean of backlogs?
There are many firms that do business in India’s defence space, eager to profit from the country’s push to indigenise the production of defence equipment. Being able to call themselves “defence companies” gives them cachet with investors, given how defence stocks have become popular in India.
But look closely at their revenue, and it becomes clear that many of India’s “defence companies” barely dip their toes into the sector.
My colleagues Abhirami G and Anand Kalyanaraman dived into these companies’ financials to find out how they use the defence label to garner attention from public-market investors.
There’s no business like the defence business. Ask the $400M company that has little to do with it
Unimech takes the IPO route to become a pricey Indian defence stock. Except its business, like most of its peers’, is hardly Indian or even defence
The same story plays out in adjacent sectors too, like the drone industry.
It’s strange that a company that has no history of manufacturing made its second drone-manufacturing deal in less than five months. As much as 92.94% of revenue in FY2024 came from “wholesale trading of telecommunications and allied products,” it said in its latest annual report.
Optiemus Infracom assembles electronic devices. Right now, it’s positioning itself to benefit from a ban implemented in 2021 that outlaws the importation of drone components from China, which controls 80% of the global drone market.
It isn’t mass-producing drones yet, but the prospect of that development has already led to significant upward movement for its stock price.
This ‘drone’ multibagger has little to do with drones yet
Avoiding Chinese parts in drones, Optiemus unveils drones and partnership with two Taiwanese drone makers even as India struggles to make up its mind about ‘locally made’ and ‘white-labeled’ drones
“Make in India, Make for World” has been a slogan for self-reliance and excellence, but for startups in the defence world, it’s a maxim for survival.
Ask Tonbo Imaging, which produces imaging systems for armed forces around the world, including those of the US and Israel. With 60% of its revenue from exports, has Tonbo finally figured out what it takes to be a defence manufacturing company in India?
A rescue act: Defence startup Tonbo relies on its outsourcing vendor to be its defender
India's defence sector has never had it this good. Still, US$55M-worth Tonbo Imaging's recent moves show what it takes to build a new-age defence manufacturing company
That’s all for this edition. You can read this week’s entire collection below, and write to me at [email protected] if you have any thoughts, suggestions, or feedback.
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Rahul leads the promotion and distribution efforts for the journalism produced by The Ken. He works at the intersection of the publication's editorial and business operations.
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