Defence Electronics in India: How a Small Engineering Team Enters the Supply Chain

Srihari Maddula

8 hours ago

18 min read

A close-up of a pattern of small squares on a chip — Photo: Maxence Pira / Unsplash

Choose the door, build the proof, and respect the clock. Those three words explain nearly every success and nearly every failure we see when a small engineering team tries to sell electronics into Indian defence.

A door is the route by which a buyer can legitimately start buying from you: an item on a list, a vendor registration, a funded challenge, a development project, a subcontract to a larger company. A proof is the evidence the buyer needs before it can say yes: environmental and electromagnetic test results, an honest statement of indigenous content, a quality system, a clean ownership of the design. A clock is the time that passes between the first conversation and the first payment, which in defence is measured in quarters and often in years.

Teams that fail usually fail on one of the three. They knock on the wrong door because it was the one they heard about. They arrive without proof and get sent away to build it, losing a year. Or they build a business plan around revenue that arrives eighteen months later than they assumed, and run out of cash holding a qualified product.

This is a framework post. It sets out the policy landscape as it stands in November 2026, describes five doors, four proofs and the clock, and gives two small calculations you can run on your own numbers. It is written for engineering teams and founders, not for lawyers, and several of the rules described are being revised, so where I am relying on public reporting or on a draft, I say so. Read the primary documents before you commit money.

The Framework in One Table

Element	The question it answers	What goes wrong
Door	Through which route can a buyer start buying from us?	Choosing the route that sounds glamorous and not the one that fits the product
Proof	What evidence does the buyer need to say yes?	Arriving with a working prototype and no test results, content statement or quality system
Clock	How long until the first payment, and how do we fund the wait?	Planning cash for months and living through years

The rest of the post follows that order. Before the doors, a note on where small teams actually win.

Where Small Teams Win, and Where They Do Not

Large defence platforms, aircraft, ships, armoured vehicles and missiles, are built by public-sector undertakings and a small number of large private companies. A small engineering team will not win those. What it can win is the layer beneath them: electronics, instruments, rugged controllers, test and measurement equipment, communication modules, power systems and software tools that go into platforms or support them in the field.

Four kinds of work suit a small team. The first is import substitution of a specific electronic item that an organisation currently buys abroad and wishes to buy at home. The second is sub-system supply to a larger integrator that needs a specialist for one function, such as a data acquisition unit or a power conditioner. The third is support equipment and test equipment, which is a large, steady market with lower qualification barriers than flight or combat hardware. The fourth is innovative products from a startup or small company, where government schemes exist specifically to fund early trials.

The advantages of a small team are speed of design, willingness to take small orders and the ability to own a design end to end. The disadvantages are a thin balance sheet, little experience of procurement procedure, and no ability to absorb a long payment delay. The framework is built around those disadvantages.

The Policy Landscape in November 2026

Five parts of the framework of rules shape how a small company can enter, and several are in motion.

The Defence Acquisition Procedure 2020 governs live procurement. A draft Defence Acquisition Procedure 2026 was placed in the public domain for consultation in February 2026. Public summaries of the draft describe a move to fewer categories, higher indigenous-content thresholds in the top category, routes based on technology readiness level, and two-stage trials. I could not confirm from public sources whether it has since been finalised, so check the Ministry of Defence's site for the current status before relying on any threshold.

Under the 2020 procedure, the top category for procurement is Buy (Indian-IDDM), for equipment indigenously designed, developed and manufactured, with a minimum of 50 percent indigenous content. Buy (Indian) requires manufacture in India with a higher content figure where the design is not indigenous. Separate routes cover the three Make categories, the strategic partnership model and development led by the research organisation or the public-sector undertakings.

The Positive Indigenisation Lists name items that will not be imported once they can be made at home. Five lists had been notified, covering 5,012 items, before the sixth was notified on 18 August 2026. The sixth list has 405 strategically important items, 389 for defence public-sector undertakings and 16 for the Coast Guard, with an estimated business potential of 3,070 crore rupees, and it includes defence electronics such as radars, sonars, fire control and satellite communication systems. Once an item is developed in India, it is to be procured from Indian industry, particularly small companies and startups.

The SRIJAN portal, launched in 2020, is where those items are listed. Public reporting says it has facilitated the offer of more than 33,000 items for indigenisation by public-sector undertakings and service headquarters through June 2026.

The innovation scheme, iDEX, operates through the Defence Innovation Organisation, a non-profit company formed by two of the public-sector undertakings. A deep-technology window called ADITI is reported to offer grants of up to 25 crore rupees. The Technology Development Fund supports development by industry, with a graduation path from iDEX and TDF projects into Make-I.

Instrument	What it is	Status to verify
Defence Acquisition Procedure 2020	The rulebook for capital acquisition today	Confirm it still governs, and read the version your tender cites
Draft Defence Acquisition Procedure 2026	Proposed revision issued for consultation in February 2026	Check whether it has been notified
Positive Indigenisation Lists	Items to be sourced domestically once developed	Sixth list notified on 18 August 2026
SRIJAN	Portal listing items offered for indigenisation	Check the live list for your product class
iDEX and ADITI	Innovation challenges and grants for startups and small companies	Check open challenges and current grant limits
Make-I, Make-II, Make-III	Development routes by funding and design source	Read the Make procedure that applies

Rules in this area are being rewritten. Treat any figure in a blog post, including this one, as a pointer to the primary document, and read that document before spending money on a bid.

Door 1: SRIJAN and the Positive Indigenisation Lists

What it is: a list of specific items that public-sector undertakings and the services have said they will buy domestically if industry can make them, with an indicative timeline for each.

How it works: you search the portal for items in your product class, read the description, the quantity and the timeline, and decide whether you can develop an equivalent. You then register, express interest and engage with the organisation that listed the item. The route to an order depends on the item. Some go through the Make procedures, some through in-house development with industry partners, and some through direct procurement once a qualified source exists.

Where it suits: a team with a specific electronic product, such as a power unit, a data logger or a communication module, that matches an imported item. It is the most direct form of import substitution and the lowest-risk entry for a new supplier.

Where it fails: when a listed item is a small part of a larger system and the buyer's real need is the system, or when the listing is a wish and not a funded requirement. Ask what happens after development. A list is a statement of intent, not an order book.

Door 2: Vendor Registration with the Public-Sector Undertakings

What it is: registration as an approved vendor with the large public-sector manufacturers and shipyards, which each maintain vendor lists and procure large volumes of electronic items and services every year.

How it works: each organisation has its own registration process, with documents about the company, its financial standing, its quality system and its products. Approval may require a facility audit, and approval is usually category-specific. Registration alone brings no orders, and it puts you on the list of those who receive enquiries.

Where it suits: companies that make standard or semi-standard items and can quote against a published enquiry. It also suits companies that want to supply spares and support items, where repeat business is common.

Where it fails: when the team expects registration to generate demand. It generates access. Revenue comes from responding quickly and accurately to enquiries, with proper quotations, and from delivering to the quality and schedule promised.

Door 3: iDEX, ADITI and the Technology Development Fund

What it is: government-backed schemes that fund early development and trials, aimed at startups, small companies and innovators with a product that could serve a defence need.

How it works: challenges are published by the services or the public-sector undertakings, describing a problem. Teams apply with a proposal, selected ones receive funding for prototype development, and successful prototypes enter trials with the sponsoring organisation. A funded project that succeeds can graduate into a development procurement under Make-I, where the winner can be issued the request for proposal directly.

Where it suits: a genuinely novel product, or a product that solves a problem described in an open challenge, from a company small enough to be eligible. Eligibility criteria on company age and size apply, and they differ between schemes, so check them against your company's legal entity and date of incorporation before spending a week on a proposal.

Where it fails: when the product is an ordinary item that someone else could make, or when the team treats the grant as revenue. A grant funds development. It does not guarantee a purchase order, and success in trials is a stage, not a finish.

Door 4: The Make Routes

What it is: the procedure for indigenous design and development of defence equipment, split by who funds it.

How it works: Make-I is government funded, with the government bearing most of the development cost against a stated requirement. Make-II is industry funded, where the vendor designs and develops at its own cost, to a requirement or an innovative idea, and the government commits to evaluate the result and, if it passes trials, to consider procurement. Make-III covers items that are not designed and developed in India but are manufactured here for import substitution.

Where it suits: Make-II suits a team that has already built a product and has the funds to carry it through trials, which makes it a natural second step after a grant or a first customer. Make-I suits a team that has won a development contract and can use government funding for scale-up.

Where it fails: Make-II carries the full cost and risk on the vendor, with no guarantee of an order at the end. For a thin balance sheet, that makes it a door to walk through only with money in the bank for the whole duration, or alongside a committed buyer.

Door 5: Selling to Primes and Integrators

What it is: becoming a subcontractor to a company that already holds a defence contract and needs your product as a component or sub-system.

How it works: the prime or integrator, which may be a public-sector undertaking or a large private company, defines the interface and the qualification requirements. You supply against its purchase order. It carries the relationship with the end customer and, usually, the programme risk.

Where it suits: teams that want revenue sooner and are comfortable being invisible to the end user. It is the fastest path to a first defence order, and a good way to learn what qualification really involves.

Where it fails: a subcontractor has little leverage. Prices are negotiated down, intellectual property clauses can be aggressive, and the prime can replace you once the design is stable. Read the ownership clauses with a lawyer before signing.

A door opens faster when the proof is already in the file. Build the evidence first and every route gets shorter.

Choosing a Door

Your situation	Likely best door	Reason
You have a finished product matching a listed imported item	SRIJAN and the indigenisation lists	Direct import substitution with a named buyer
You make standard items and can quote against enquiries	Public-sector vendor registration	Access to enquiries and repeat spares business
You have a novel product and a young company	iDEX or ADITI	Funding for development and trials
You have a working product and funds for a long trial	Make-II	Full ownership of the design, with no funded development
You want revenue within a year and accept less control	Subcontract to a prime	Fastest to a first purchase order
You have none of these	Build the proofs first	A door opens faster when the evidence is in hand

Most teams use two doors in sequence. A common pattern is a subcontract to learn the rules and earn the first references, then vendor registration for spares and enquiries, then a development route for an owned product. Resist the temptation to apply to everything at once, since each application costs management time that a small team cannot spare.

Proof 1: Indigenous Content, Calculated Honestly

The procedure's top category demands a minimum share of indigenous content, and buyers will ask you to state yours. The arithmetic is simple, and it hides two traps.

The code below computes a value-based share for a small controller. It counts the cost of parts by origin, plus the value of design and labour done in India. It is a simplified illustration, and the formal definition in the procedure your tender cites, which specifies what counts, how to treat taxes and how to value design, is the one that governs.

def indigenous_content(parts, design_value=0.0, labour_value=0.0):
    # parts: list of (name, cost, indian_origin) ; simplified value share, not the formal definition
    total = sum(c for _, c, _ in parts) + design_value + labour_value
    indian = sum(c for _, c, ind in parts if ind) + design_value + labour_value
    return round(indian / total * 100, 1), round(total, 0)

bom = [("enclosure", 18000, True), ("pcb fabrication", 9000, True), ("processor module", 42000, False),
       ("rf front end", 26000, False), ("power supply", 11000, True), ("connectors", 8000, True),
       ("display", 14000, False)]
print(indigenous_content(bom, design_value=30000, labour_value=12000))   # (51.8, 170000.0)
print(indigenous_content(bom))                                           # (35.9, 128000.0)

The same bill of materials scores 36 percent indigenous on parts alone and 52 percent once Indian design and labour are counted. That gap is the first trap. Where the rules value indigenous design, the design you own is worth more than another domestic enclosure, which is the commercial reason to keep your design work in house and document it. The second trap is the imported parts themselves. The processor and radio modules, which are the costly items, are the ones hardest to replace, and a design that depends on them for half its cost will struggle to pass a higher threshold. A draft rule that raises the threshold to 60 percent makes this more pressing.

Keep a living content statement for every product: the bill of materials with origin and cost for each line, the value of design and the value of manufacturing, with supporting invoices. Update it when a supplier changes. A statement you cannot support with documents is worth nothing in an audit.

Proof 2: Environmental and Electromagnetic Evidence

Defence buyers expect test evidence before field trials, and the two bodies of evidence are environmental and electromagnetic. Our earlier posts on the environmental test standards, MIL-STD-810 and the Indian JSS 55555, and on electromagnetic pre-compliance under MIL-STD-461, set these out in detail. Three points matter for entry.

First, the contract names the standard and the severity, and the test plan must follow. Ask for them early, in writing. Second, test evidence from an accredited laboratory carries weight that your own bench results do not, so budget for formal tests on the version of the product you intend to sell. Third, a pre-compliance campaign is cheap and quick and should come first, because a failure found in your own lab costs days and one found at the formal test costs weeks.

A buyer who sees a product with a complete test report, correct standards, calibrated equipment and a clean failure log treats the supplier as lower risk. For a small company with no track record, that report is the most persuasive document in the file.

Proof 3: Quality System and Documentation

A quality system tells the buyer that you can make the same thing twice. Defence buyers commonly look for an accredited quality management certification, and some categories, particularly airborne equipment, bring additional requirements from the relevant certifying authority. Which applies depends on the buyer and the item, so ask.

Whatever the formal certificate, four practices carry most of the weight. Configuration control, so that every unit can be traced to a drawing revision, a bill of materials revision and a firmware version. Traceability of components, with lot or date codes recorded for critical parts. Inspection records for incoming parts and finished units. And a documented procedure for handling nonconformities and changes.

The documents that go with a product are part of the product: the drawings, the test procedures, the user manual, the maintenance instructions and the spares list. Teams that treat these as an afterthought are asked to write them under pressure at the end of a trial, and the quality shows.

Proof 4: Ownership, Security and Supply-Chain Hygiene

Four questions about ownership and security come up in every serious discussion.

Who owns the design? Under funded development routes, the terms for intellectual property and for the buyer's rights to manufacture elsewhere differ from industry-funded routes, and the difference can decide whether the product is yours to sell to others. Read the clauses before signing and have them reviewed.

Where do your components come from? Buyers increasingly ask about the origin of critical parts, about counterfeit risk and about parts from sources they consider sensitive. Buy from authorised distributors, keep the documents, and avoid single sources where the buyer cares.

How is the software controlled? Source code escrow, a software bill of materials and a controlled build process increasingly appear in requirements, and a firmware update path needs to be designed with security in mind from the start.

What does your own security look like? A company handling restricted drawings or specifications is expected to protect them, with access control, controlled devices and a clear policy on sharing. The standard grows with the sensitivity of the programme.

The Clock: Why Defence Revenue Arrives Slowly

Defence purchasing runs on a different clock from commercial sales. The steps between a first meeting and a first payment typically include a requirement or enquiry, a technical evaluation, trials, a commercial negotiation, an approval chain, a purchase order, delivery and inspection, and then a payment cycle. Each step can take weeks or months, and some run in parallel with long gaps between actions.

The sketch below turns that into the one number that decides survival: the working capital needed to carry the company from the first spend to the first payment. The inputs are illustrative.

def working_capital(monthly_cost, months_to_first_payment, advance_pct=0.0,
                    contract_value=0.0, payment_lag_months=3):
    funded = contract_value * advance_pct
    gap_months = months_to_first_payment + payment_lag_months
    return max(0.0, monthly_cost * gap_months - funded)

print(working_capital(1_200_000, 14, 0.10, 6_000_000, 3))   # 19800000.0, about 1.98 crore
print(working_capital(1_200_000, 14, 0.0, 6_000_000, 3))    # 20400000.0, about 2.04 crore

A team burning 12 lakh rupees a month, with 14 months to a purchase order and three more to the first payment, needs about 2 crore rupees of working capital, whether or not the contract is worth 60 lakh. A 10 percent advance barely changes it. The sums are uncomfortable, and they explain why the same company can have a successful product and a failing balance sheet.

Three habits help. Plan cash for the long case, not the likely one. Combine defence work with a commercial line that pays on a normal cycle, so that one funds the other. And treat funded routes, such as grants and development contracts, as the way to carry cost during the wait, not as extra income.

In defence, the product can be ready a year before the company can afford to wait for the order. Plan the cash for the wait.

Reading a Requirement Document Before You Bid

A request for proposal or a trial requirement is the most valuable document a small team receives, and the most often skimmed. Reading it in a structured way, line by line, decides whether you bid, how you price and what you test.

Start with a compliance matrix. List every numbered requirement in a table with four columns: the requirement, your product's value or behaviour, the evidence you hold for it and the gap. A requirement that your unit meets with a test report is a green line. One that it meets by design but without a test is a risk. One that it does not meet is a decision: redesign, request a deviation, or decline.

Look for the words that carry cost. A named standard and severity, a required operating temperature range, a mean time between failures with a stated method, a requirement to supply spares for a number of years, a mandatory training course, a maintenance manual in a prescribed format, a warranty period with an on-site obligation. Each one is a line in the budget, and any of them can double the cost of a small order.

Check the commercial terms before the technical ones. Look at the payment schedule, the performance guarantees, the liquidated damages for delay, the intellectual property clause and the buyer's right to terminate. A technically perfect response to an unworkable commercial clause is a loss waiting to be signed.

Ask questions in writing, within the permitted window, and keep the answers. Where a requirement is ambiguous, an answer on the record protects you in a later dispute.

A compliance matrix is the cheapest risk review you will ever do. Fill it in honestly before you price, and every grey line is a conversation to have now.

Working With a Prime Without Losing Your Design

Subcontracting to a larger company is the fastest door to a first order, and the one where small teams most often lose control of what they built.

Protect four things in the agreement. The first is ownership of the design. State that the intellectual property in your product remains yours, that the prime receives a licence to use the delivered units and that any custom adaptation is covered explicitly. The second is the right to sell the same product to others, since a clause that makes the design exclusive to the prime can end your business outside it. The third is source and design documentation. A requirement to hand over complete manufacturing data as a condition of the first order lets the prime make the product itself, so agree what is delivered, when and under what conditions. The fourth is payment terms, with milestones tied to deliverables you control and not to the prime's own customer's approval.

Make yourself difficult to replace in honest ways. Own the test fixtures and the calibration data. Keep the firmware update path under your control. Document your quality process so that the prime's inspectors trust your output. And keep a direct line to the end user wherever the contract permits, because users remember the supplier whose product works.

A prime is not an adversary. It is a customer whose incentives differ from yours, and a short, clear agreement serves both.

A Composite: The Rugged Controller That Took Twenty-Two Months

This is a representative composite, genericised, from several small-company journeys. The numbers are illustrative.

A small engineering team designed a rugged data acquisition and control unit for vehicle-mounted use. It had a prototype, a commercial customer, and a belief that the defence market was the larger prize.

In the first three months the team found an import-substitution item on the indigenisation portal that matched its unit's function, registered and introduced itself to the listing organisation. The organisation asked for a technical presentation, then a compliance matrix against its requirement, then a sample for trials.

The team had not planned for the evidence. The unit had never seen a formal environmental test, and the requirement named a specific standard and severity. Pre-compliance in the team's own lab showed two weaknesses, a connector that loosened under vibration and a thermal problem at the upper temperature limit. Fixing them took two months and a board revision. Formal testing took six weeks of laboratory time plus a queue.

The indigenous content statement was a second surprise. Counting only parts, the unit scored low, because two imported modules dominated the cost. Counting the team's own design and the manufacturing done in India raised the figure above the threshold, but the buyer asked for documents to support the design value, and compiling them took three weeks.

Trials ran for four months with two rounds of observations. A commercial negotiation, an approval and a purchase order took another five months. The first payment arrived, after delivery and inspection, at month 22.

The team survived because it had kept its commercial line alive. Its mistakes were all about timing, and none of them about technology: it had planned for twelve months, not twenty-two, it had left the testing until after the trials began, and it had not prepared the content documents in advance.

Mistakes That Cost a Year

Mistake	What it costs	The fix
Applying to every scheme at once	Management time with no focus	Pick one door, then a second
Treating registration as a sales channel	Months of waiting for enquiries	Respond fast to every enquiry, with proper quotes
Starting formal tests after trials begin	A trial paused for a redesign	Pre-compliance and formal tests before the sample
Counting indigenous content without documents	A failed audit	Invoices and design records, updated on every change
Signing ownership clauses unread	Losing the right to sell the product elsewhere	Legal review before signature
Planning cash for the likely timeline	Running out in month fourteen	Plan for the long case, and keep a commercial line
Depending on imported modules for most of the cost	Failing a higher content threshold	Design for substitutes, and own the design

A Twelve-Month Plan

Month one: choose the product, read the current Defence Acquisition Procedure status, and search the indigenisation portal for items in your class.
Month two: write the content statement, with the bill of materials, origins and costs, and identify the imported items that would sink a higher threshold.
Months two to four: run a pre-compliance campaign against the standards you expect to see, and fix what fails.
Months three to five: register with the vendor lists and the portal that fit, and prepare a standard compliance matrix and datasheet for your product.
Months four to six: book formal environmental and electromagnetic tests, and file the reports with the content statement and quality documents.
Months six to nine: pursue one development door, whether a challenge, a registration-led enquiry or a subcontract.
Months nine to twelve: review cash against the long timeline, and decide whether to carry on alone, add a partner or take a funded route.

The Order of the Words

Door, proof, clock. A product that fits the door, arrives with the proof and is funded through the clock will find a buyer. The same product, missing any one of the three, will not.

Pick the door that matches the product, build the evidence before anyone asks for it, and plan the cash for the long case. Then read the primary documents again, because the rules will have moved.

Related service: Certification and Compliance Support

EurthTech is an engineering-first product design and embedded systems company with a development center in Hyderabad. To discuss a project, write to connect@eurthtech.com or see https://www.eurthtech.com/case-studies.