DRDO saving trillions through R&D is a masterclass for corporates

India’s defence R&D arm, Defence Research and Development Organisation (DRDO) has empowered India with cutting-edge defence technologies and constantly pushes to achieve self-reliance. It is known for its indigenously developed strategic platforms and technologies that have given our military might extra muscle. But what’s most awe-inspiring is how this government organisation has been able to save ₹2,64,000 crore for the Indian exchequer over five years.

Let’s find out how much this amount really is and what the achievement means. In the Indian context, this is not just a ‘saving’. It is more than the entire annual budget of several key Indian sectors. In the 2024-25 budget the government allocated approximately ₹1.80 lakh crore for the entire ministry of rural development. DRDO has saved enough money to fund the development of almost every village for one year. It can cover two years of the nation’s education funding. It could help build 150 AIIMS hospitals. In short, it’s a mammoth saving, and DRDO managed this feat through indigenous research, by choosing to ‘build’ instead of ‘buy’. It has become the brain behind every operation.

For several decades, India was the largest importer of arms. This was a costly affair. You needed to pay a premium for the brand, the shipping and the technology. DRDO chose to build the technology instead of buying it, thereby cutting significant costs. It developed technologies like the MIRV or the Multiple Independently Targetable Re-entry Vehicle for Agni missiles and the Hypersonic Anti-ship Missile locally, thus saving on import tax.

For India Inc., cost cutting often means decreasing headcounts or reducing office perks. But there are lessons it can learn from DRDO about cutting costs, which pay off in the long run.

Owning the Intellectual Property or the ‘Deep Tech’

DRDO saved big by building the MIRV and hypersonic technologies. Many Indian companies depend on foreign proprietary technology for their core operations. If a piece of software or technology is critical for your company, don’t rent it but build it. Companies like Zoho and Freshworks have built their own data centres and software stacks saving millions in ‘SaaS taxes’.

The advantages of ‘vendor development’

DRDO uses the Technology Development Fund (TDF) to train and fund MSMEs to build parts. This creates a cheaper and faster supply chain. Suppliers can be treated as R&D partners. When Tata Motors developed the Nexon, it worked closely with local Indian vendors to innovate. It created a premium product at a local price point and gained market leadership.

Streamlining processes

Process hygiene leads to efficiency. DRDO migrated 28 lakh pensioners to the SPARSH (System for Pension Administration) platform. This removed manual processing and the need for middlemen. The platform manages pensions for the armed forces and defence civilians. Usage of centralised shared services is one way of increasing efficiencies in the system and cutting administrative overheads.

Import substitution to avoid currency risk

Companies that import raw materials lose their margins if the rupee fluctuates. DRDO’s indigenous research makes it immune to global currency markets. Sourcing locally is actually a financial hedge. After the 2021 global supply chain crisis, several Indian pharmaceutical companies like Sun Pharma began researching and manufacturing their own APIs (Active Pharmaceutical Ingredients) to stop relying on imported raw materials.

Free availability of patents

DRDO patents are available on DRDO website for use by industries. These patents are available free of cost to industries to enable ‘Aatmanirbhar Bharat’. This allows private companies to use military grade technology and become self reliant. Indian startups in the drone and EV sectors are currently using battery technologies and sensor designs developed by DRDO to build products faster than global competitors.

The organisation has shown how companies can move beyond quick fixes and embrace indigenous R&D to cut costs. True profitability comes from building the best tools and not from simply buying them from outside sources.