Defence Tech Needs "Quality Over Price," Says Founder Ahead of Budget 2026

The health of the entire supply chain is at stake, according to Shivaraman.

He compared this philosophy to Tesla's decision to open-source its patents, suggesting that a company cannot succeed if the infrastructure around it collapses. For Shivaraman, the priority is maintaining the momentum gained over the last decade. "Even if it's not for technological readiness, just to ensure that [the ecosystem] has been created over the last eight to ten years... continues to thrive," he said. "The orders need to continue to grow."

A major sticking point for Shivaraman is the "L1 system," where contracts are typically awarded to the company offering the lowest price. He believes this is counterproductive for deep-tech and R&D projects where performance is critical. "I think the govt needs to take a long, hard look at the L1 system of procurement that's there. And especially for deep tech products and in the R&D side of things," he explained.

Under the current rules, the focus on cost often sidelines the most advanced solutions. "When you want the highest quality of product, you get it to the lowest bidder. It's not the most efficient way of doing it. I mean you don't end up with the best technology possible."

Shivaraman is advocating for a shift toward "T1" procurement, where the most competent technology is selected first. He expressed particular concern that even innovation-focused funds like the DRDO's Technology Development Fund (TDF) still fall back on price-based selection. "It's a great distress to me to know that TDF... operates on L1," he said, adding that this "basically means that the coolest technologies are built by the guys who quote the lowest, not by the guys who are most competent."

The issue is further complicated by the practice of "reverse auctions," where bidders can continuously undercut each other's prices after a tender has opened. Shivaraman warned that this creates "nonsensical" bidding wars that leave the winner unable to actually deliver the product. "Whoever wins it, whether me or him, we will not be able to execute the orders that will take 12 months time," he warned. In such cases, the project often ends in cancellation, leaving both the government and the startups empty-handed. "Given in a hyper-competitive landscape like India, reverse auction... we have seen very good tenders being ruined through this."

Ultimately, Shivaraman looks towards global models, like those in the U.S., which offer more stability for tech developers. He suggested that moving towards prolonged induction and more flexible budgeting could provide the security startups need to innovate. "One of the things that I have seen in the US that I really like is when they place contracts with technology developers for an infinite budget and infinite quantities," he concluded, signalling that India's "Atmanirbhar" (self-reliant) journey may require a more visionary approach to contracting.

- ANI