The Indian Hardware Renaissance is Here

As Indians, we are proud of our "jugaad' (quick fix) skills. However, the same approach has long been a barrier to the emergence and growth of the country's hardware startup ecosystem. Traditionally, India has been the innovation bed for software focused startups, while the hardware segment of the Indian startup ecosystem has been lagging. However, things may not remain the same in the coming days. Here is why things are much brighter for hardware innovation.

1. The New Hardware is Smarter: Till about a few years ago, the hardware industry was all about giant factories manufacturing products. Given that it was easily copied, hardware got easily commoditized and the manufacturers with the lowest cost and big scale of operations won. Modern day hardware products are about combining hardware with intelligent software. These innovative products powered by artificial intelligence, advanced analytics and the processing power of cloud allow Indian hardware startups to play on their strength that is to build great intelligent software which not only distinguishes them but also acts as a layer of defensibility to command a high premium.

2. Distribution is Easier: Before the e-commerce boom in India, distributing a hardware product for a startup was a nightmare. Imagine a small startup trying to place their products in stores or thousands of pharmacies and the challenges of inventory and logistics associated with it. With the growth of e-commerce, customers can buy a product online and the logistics can be managed by the e-commerce company or a logistics company. This helps give the startup a nationwide reach without having a complex distribution chain or a large inventory. Therefore, those who were looking to provide cutting edge hardware solutions can now focus on innovation and not bother about distribution initially.

3. Funds are not so Dire- A prototype of a software startup can be built by a few engineers out a small room and validated by early customers. This makes raising capital easier because software companies can prove the product and market adoption to investors early on. On the contrary, hardware startups need significant upfront effort and investments to even prototype – leave apart taking it to production and testing market demand. Hence, hardware-based ideas in India couldn't take off due to lack of patient capital in the early stages. However, the scenario is changing with a fledging Angel Investor ecosystem who are ready to take large bets. Most VC funds in India are looking for deep-tech investments and their commitment to the hardware sector has grown substantially in the last 3-4 years.

4. Access to Talent- Today, hardware devices are no longer dumb boxes, integration of software is making them intelligent. This means that hardware firms are in need of software and hardware tech talents simultaneously. India already produces some of the most talented software engineers in the world. For hardware skills, we are taking help of foreign consultants for training and development which has been made easier by the digital collaboration.

The other major talent shift we are seeing in today's time is reverse brain drain led by the growth of tech firms in India. Engineers who have studied in foreign universities are coming back as Indian tech firms provide them with exciting projects opportunities. This is keeping up the momentum of tech innovation in India.

With all the tailwinds, India is set to go through a hardware renaissance. However, we needn't forget that we do not become another Germany or China in terms of hardware innovation, but build New India. After all, it is not always about "jugaad.'