End dependence days: What India should and should not build

It's Independence Day, an occasion when we feel extra proud of our achievements over the last 79 yrs, but especially those made in the economic domain over the last few decades. Even without the spur of August 15, India discovers a new 'stack' every few months. First came the 'India Stack'. Then the startup stack. Then DPI stack. Now, apparently, what stands between India and deep-tech glory is a procurement stack.

Some influential tech investors are arguing that GoI should become the country's 'first customer' for deep-tech startups. Procurement rules, they argue, are antiquated. Tendering favours incumbents. Bureaucrats fear experimentation. If only ministries bought more from startups, Indian innovation will surely flourish.

It sounds persuasive. And comforting. Because it suggests that the problem lies somewhere inside government paperwork rather than inside the marketplace. But before turning every government department into a VC with purchase orders, perhaps we should ask: 'Why do deep-tech companies require government customers in the first place?'


The world's greatest tech companies didn't become successful because governments heroically purchased their products. They succeeded because they solved problems that paying customers wanted solved. Governments have certainly played important roles in funding research, and enabling strategic technologies. But making public procurement the centrepiece of commercialisation risks creating an ecosystem optimised not for innovation but for winning tenders.

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India has an Olympic-level talent for turning entrepreneurial ambition into compliance expertise. Imagine thousands of brilliant engineers spending less time perfecting quantum computing algorithms and more time deciphering 'Annexure 14(b)', uploading notarised affidavits, and attending mandatory pre-bid meetings.

Nothing kills disruptive thinking faster than discovering that your biggest competitive advantage is understanding procurement manuals better than your competitors. Governments are extraordinary institutions. But they are not particularly famous for spotting tomorrow's winning technologies.

If bureaucracies were naturally gifted at predicting tech winners, governments would have invented smartphones before Silicon Valley, streaming before Netflix, and GenAI before venture capital. Sure, the US Department of Defence funded Arpanet, the precursor to the internet. But innovation is fundamentally about making thousands of imperfect bets, expecting many failures and celebrating successes. Governments are structurally designed to do the exact opposite.

Civil servants are rewarded for avoiding mistakes, not for taking risks. CAG investigates failed purchases far more enthusiastically than missed opportunities. Parliamentary committees rarely summon officials to explain why they failed to back a startup that later became successful. They do summon officials who approved a purchase that failed.

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The safest procurement decision is almost always buying yesterday's technology from yesterday's vendor. Changing procurement rules does not change this psychology. It merely gives risk aversion newer forms to express itself.

The real bottleneck isn't GoI buying too little innovation, but Indian Inc skimping. Large Indian corporations proclaim themselves champions of innovation while expecting startups to demonstrate 5 yrs of profitability, 3 Fortune 500 references, ISO certifications from planets yet to be discovered, and proof that the product has succeeded everywhere else. Every company wants to be an early adopter - as long as someone else adopts first.

If India's manufacturing giants, pharma companies, banks, telecom firms, logistics players and industrial conglomerates became serious buyers of indigenous deep-tech, startups would spend far less time waiting outside ministry corridors. Corporate procurement departments resemble government procurement departments, wearing better suits. The same executives who complain about bureaucratic inertia, frequently reject startup solutions because 'the vendor is too young'.

There's another danger in excessive dependence on public procurement. It emphatically changes entrepreneurial incentives. Instead of asking, 'How do I build a globally competitive technology?' founders begin asking, 'How do I satisfy this tender specification?' The first question creates world-class companies, the second, exemplary paperwork.

India has historically excelled whenever entrepreneurs pursued global markets, rather than domestic policy preferences. Software exports didn't become a global phenomenon because governments purchased millions of lines of code. Pharma companies didn't become international leaders because ministries ordered generic medicines first. Auto component manufacturers didn't conquer overseas markets by mastering tender documents.

They competed, improved, survived customers who had no patriotic obligation to buy from them. That discipline created excellence.

Deep-tech deserves the same discipline. Yes, government procurement should become faster, simpler and more innovation-friendly, particularly in strategic sectors, such as defence, semiconductors, energy, healthcare and space, where the state is naturally a dominant customer. Smarter procurement has an important role to play. But it cannot become the economic philosophy of deep-tech commercialisation.

The larger ambition should be to create corporations willing to buy from startups. Reward executives who experiment. Encourage regulatory sandboxes. Improve access to patient capital. Strengthen university technology transfer. Reduce compliance friction. Make failure socially acceptable. Most importantly, build customers who purchase innovation because it is demonstrably superior, not because a government circular encouraged them to.

Countries become tech powers when millions of customers voluntarily choose inventions created there over competing alternatives. That is not a procurement stack. It's called a market. And unlike procurement manuals, markets have a habit of rewarding only those that truly deserve to stand out and win.