Changes in India’s Defence Technology Development Policies Over the Decade

“A renaissance is imperative for us to once again become a knowledge superpower rather than simply providing cheap labour in areas of high technology.”

Dr APJ Abdul Kalam

Introduction

Over the last decade, there has been a growing realisation of `technology’ being a significant component of national power, complementing the traditional elements of economic strength, military capabilities, and political heft. This realisation, accentuated by the ongoing technology competition between major powers has presented India with a unique opportunity to realise the full potential of its technically qualified and innovative human resources. The developed nations of the world seek to harness this `talent’ to bridge the technology gap with China, in a telescoped time frame. This calls for a two-track approach - of identifying and nurturing domestic talent and evolving policies of integrating with global strategic partners to co-develop technologies for mutual benefit. The government has identified this need and has initiated concrete steps towards meeting these ends.

Aim

This paper aims to recapitulate the measures initiated by the government in the domestic and foreign policy domain over the last decade, to promote innovation and enhance India’s and its strategic partners’ cumulative power through technology development.

Nurturing Talent – Internal Policy Initiatives

The foremost requirement for developing technological prowess is to create a national environment that promotes innovation. This calls for identifying talent and providing the necessary wherewithal, along with mentoring, and financing to empower innovators to realise their potential. It also entails initial hand-holding till these ideas translate to prototypes. Hereafter, these innovations need to be meshed into the future capability development plans or plugged into the global innovation and supply chains so that the technologies that have been developed can be monetized through use in the civil and military fields.

Towards this end, the government, in 2018, created a `Defence Innovation Organisation (DIO),’ a `not for profit’ company under Section 8 of the Companies Act 2013. At its inception, it was supported by Hindustan Aeronautics Limited (HAL) and Bharat Electronics Limited (BEL), two PSUs. A functional arm of DIO christened `Innovations for Defence Excellence (iDEX)’ was also set up alongside. ^[1]

The DIO now oversees the functioning of the iDEX framework, acting as a bridge between the requirements of the Armed Forces and the solution providers. Its core objective is to create an ecosystem, essential to foster innovation, entrepreneurship, and technology development, specifically in the Defence and Aerospace sector.

Since its inception, iDEX-DIO has been launching a series of innovation challenges under the `Defence India Startup Challenge (DISC)’ programme, with problem statements coming from the Armed Forces, DPSUs & (now corporatised) Ordnance Factories. Challenges, for different segments of innovation, have been launched by the MOD and the services in separate categories, to include: iDEX Open Challenge, iDEX Prime X, iDEX (Prime) SPRINT (by the Indian Navy), <sup>[2]</sup> iDEX Prime (Space), ADITI (Acing Development of Innovative Technologies with iDEX), <sup>[3]</sup> and a series of `Meher Baba Competitions by the Indian Air Force. ^[4] The winners are given grants ranging from Rs 1.5 Crores (15 million Rupees) to 10 to 25 Crores for prototype development. The results have been quick, with 131 contracts for development having been signed and 15 prototypes developed, till the end of 2023. ^[5]

Alongside, to nurture and hand-hold innovators and MSMEs, a series of Partner Incubators – to include eminent academic institutions, industry, private incubators, entrepreneur development centres; and Investor partners have been enrolled. According to the Ministry of Defence (MoD) Year-end Review 2023, over Rs 200 Crores have been pledged by various investors^[6] so far.

In addition to the above, a “Technology Development Fund (TDF)” (now also referred to as Technology and Product Development Fund) scheme was initiated under the DRDO in 2016, to support any MSME or Startup which showed active interest towards technology development. It entails funding up to Rs 50 Crores (initially it was Rs 10 Crores) through Grant-in-Aid. Support is also extended through mentoring, providing testing facilities, and product development. Till the end of December 2023, approximately Rs 295 Crores have been allotted to 70 projects, under the TDF scheme. ^[7]

Further, to offer tangible incentives to the entrepreneurs for technology development, several new provisions have been incorporated in Defence Acquisition Procedure 2020 (Over the previous Defence Procurement Procedure 2016). The chapter on the indigenous “Make” ^[8] has been modified to incentivise innovation; a new chapter on “Acquisition of Systems Products and ICT Systems” ^[9] has been added. The provisions of offsets discharge through the transfer of technology have also been further liberalised. ^[10]

It is, however, well appreciated that technology development, particularly in the fields of critical and emerging technologies is hugely expensive and complex. It requires rigorous STEM (science, technology, engineering, and mathematics) education, specialised skilling, development of laboratories and testing facilities, access to data, financing and overcoming regulatory barriers. No country, globally, seems capable of doing it all by itself. The emergence of Indian talent and a conducive innovation environment has set the stage for international technology cooperation with our strategic partners.

Foreign Technology Cooperation Initiatives

International cooperation in the fields of technology is now complementing defence and security as a vital pillar of partnership and a platform to accelerate strategic convergence. While India and Russia have long had technology cooperation in critical areas, cooperation with the US, France, Australia, and Japan is progressively evolving. Several pathbreaking initiatives have particularly been taken between India and the US, to build on the efforts initiated in the mid-90s.

The idea of the India – US Defence Technology and Trade Initiative (DTTI), which had germinated in 2012, was operationalised during the period 2014-2015. Since then, it has been a flagship defence cooperation programme. Though not a treaty or a law, it is a flexible mechanism for senior-level engagement and oversight to work towards resolving process issues impeding cooperation and aligning the systems. It is directed towards increasing the flow of technology and investments; creating capabilities and partnerships for 3Cs - 'co-development', 'co-production' and 'cooperation' in research and development. DTTI has been a `silent enabler' in helping the defence establishment of the two countries resolve many mutual impediments. Most building blocks, including the Foundational (Enabling) Agreements, are now in place to progress defence partnership and interoperability.

Further, the United States elevated India to the Strategic Trade Authorisation (STA – 1) status in July 2018. This status enables access to advanced defence technologies and allows controlled items to be exported under defined conditions without a transaction-specific licence. ^[11] Under normal circumstances acceding to all four multilateral export control regimes is essential but not sufficient for a country to be placed in the STA – 1 category. India joined the Missile Technology Control Regime (MTCR) on June 27, 2016; Wassenaar Arrangement on December 8, 2017; and Australia Group on January 19, 2018. It is, however, not yet a member of the Nuclear Suppliers Group (NSG). This could be achieved since the government was successful in making the US side appreciate the circumstances under which its membership of the NSG is being resisted, by China, for political considerations.

Yet another positive has been the signing of the `Industrial Security Annexe (ISA) to the General Security of Military Information Agreement (GSOMIA-2002). This allows the transferring of classified technology and information between private industries of the two countries, setting the stage for industry-to-industry (I-to-I) cooperation. This was achieved in December 2019 during the second India- US 2+2 dialogue and is now benefitting industry on both sides.

The most recent and transformational development in the field of technology cooperation has been the conclusion of the `India-US Initiative on Critical and Emerging Technologies (iCET).' This initiative was launched in Tokyo on May 24, 2022, during a meeting between Prime Minister Modi and US President Biden. ^[12] This has enabled forging closer linkages between government, academia and industry of the two countries in areas such as AI, quantum computing, 5G/6G, biotech, space and semiconductors. The two NSAs, steering the initiative, had their first dialogue on January 31, 2023. Within a short span, in December 2023, the scope has been enhanced to include biotechnology, critical materials and rare earth processing technologies, digital connectivity, digital public infrastructure and advanced materials.

Under the iCET, considerable progress has been made towards the creation of a `complementary semiconductor ecosystem.' At least five US major companies in this field have already committed an investment of US $ 2.3 billion (plus) for setting up collaborative engineering centres, and assembly, test, and training facilities.

Considerable progress has also been made in technology development in the field of Space. Activities are being driven by India – US Civil Space Joint Working Group (JWG) led by NASA and ISRO, with a sub-working group for `Space-commerce.' The private Indian Space industry has already started cooperating with foreign partners.

(For the achievements in various fields in the first year of the India – US iCET programme please refer to an article by the author, published by `Nat Strat’^[13] in January 2024).

The most notable initiative under iCET, for the development of international cooperation in Defence technology is the INDUS-X (India-US Defence Innovation Acceleration Ecosystem). ^[14] This has opened global avenues for Indian innovators and entrepreneurs, identified through various iDEX challenges.

INDUS-X provides an “innovation bridge" to connect US and Indian Defence start-ups, with activities being directed at expanding strategic technology partnerships and Defence industrial cooperation between the governments, industry and academic institutions.

Replicating various DISC challenges (as mentioned above), Joint innovation Challenges have been launched under INDUS-X for `Mutual Promotion of Advanced Collaborative Technologies (IMPACT). Two IMPACT challenges have so far been launched. These programmes are attracting global innovators and investors, as evidenced by the participation in the Investors Meet held in New Delhi on November 08, 2023.

On similar pattern technology cooperation programmes are also being developed with Australia and France.

With France, the cooperation in Critical technologies is based on the Indo-French Road map on Cyber Security and Digital Technology adopted in 2019. Technology development is being endeavoured through cooperation in the fields of supercomputing, cloud computing, AI, and quantum technologies. ^[15] In the field of defence industrial partnership, the government is endeavouring to acquire technology from Safran for a family of helicopter engines.

With Australia, the two sides identified the considerable potential for cooperation between India’s iDEX and the Australian Strategic Capability Accelerator to explore innovative solutions to joint capability development. In the field of industrial technology cooperation, the `India-Australia Rapid Innovation and Start-up Expansion (RISE) Accelerator,’ has been launched. It aims to enable start-ups with mature tech-based innovations to plug into a cross-border innovation ecosystem. ^[16]

Looking Ahead

Having created a domestic environment that promotes innovation, and with foreign policy initiatives furthering technology partnerships and strategic convergence with friendly countries, a road map for mutual benefit needs to be evolved.

In the near term, the policy should aim at attracting investment, acquiring cutting-edge technology and skills, creating opportunities for innovators and entrepreneurs, obtaining access to advanced R&D facilities, integration in global value chains, job creation and economic growth. In the mid and long term, however, the aim should be to achieve greater self-reliance and develop indigenous capabilities for national Defence and regional stability in identified fields.
A conscious realisation must prevail that India, with its immense talent and aspirations of self-reliance (Atmanirbharta) cannot remain content and permanently slotted as a component or skilled labour supplier, a low-end partner in high-technology value chains. The value of co-developed technology must also flow to India enabling the development of capability in emerging domains and reaping commercial benefits.

A few other aspects that merit consideration are:-

1. Cooperation in the field of Critical and Emerging technologies constrains multilateralism and shrinks the scope of `hedging.’
2. Deep(er) cooperation in critical areas and setting standards necessitates `making Choices.’ Multiple partners will continue harbouring technology security concerns. Ways need to be evolved to assuage these.
3. A balance needs to be maintained between showcasing Indian innovation talent globally and unrestricted brain drain (poaching). Attractive options need to be made available within the country.
4. The current policies and the system support innovation up to the `prototype stage.' The cycle beyond that for production and acquisition/export needs to be refined.
5. The thrust of various `Innovation Challenges' needs to be focused and prioritised in consonance with the capability development needs of the armed forces and the budgets available.
6. Unregulated funding of innovators and investors through private capital can result in erosion of the real value of innovation and innovators. The government needs to extend support in critical areas to prevent them from `selling cheap.’

During the last decade, India has progressed substantially in evolving domestic and foreign policies for technology development. These policies are yielding positive results, already. There is however a need to continue situating technology development in a strategic context since this will soon be the currency of power.

Endnotes

^[1] iDEX – Innovation for Defence Excellence. https://idex.gov.in/about-dio [3]
^[2] Prime Minister Shri Narendra Modi unveils 'SPRINT Challenges' aimed at giving a boost to the usage of indigenous technology in the Indian Navy. Press Release, MOD. PIB. July 18, 2022. https://pib.gov.in/PressReleasePage.aspx?PRID=1842449 [4]
^[3] iDEX. Op Cit.
^[4] IAF’s Mehar Baba Prize, India’s first competition in defence sector: All you need to know. The Indian Express. October 16, 2018. https://indianexpress.com/article/india/iafs-mehar-baba-prize-indias-first-competition-in-defence-sector-all-you-need-to-know-5404071/ [5]
Vision Documents for MEHAR BABA COMPETITION II. https://indianairforce.nic.in/wp-content/uploads/2022/09/VISION-DOCUMENT-MBC-2-VER-7-19-Sep-22.pdf [6]
^[5] MINISTRY OF DEFENCE - YEAR END REVIEW 2023. December 22, 2023. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1989502 [7]
^[6] Ibid.
^[7] DRDO Technology News. Defence Science Library, Defence Scientific Information & Documentation Centre. Issue 228. December 06, 2023. MSMEs Urged to Collaborate on Achieving Indigenisation
Target in Defence, Aerospace Sectors. (Published in The Print, December 05, 2023). Pg 1. https://www.drdo.gov.in/drdo/sites/default/files/drdo-news-documents/NPC06December2023.pdf [8]
^[8] Chapter 3 of Defence Acquisition Procedure – 2020, re-titled as "Procedure for Procurement Under ‘Make’ and Innovation’ Categories”. Pg 321. https://www.mod.gov.in/dod/sites/default/files/DAP2030new_0.pdf [9]
^[9] Chapter 8, Page 525. Op Cit.
^[10] Defence Off-set Guidelines. Appendix E to Chapter II of the DAP 2020. Pg 109, Para 3.1 (d). https://www.mod.gov.in/dod/sites/default/files/DAP2030new_0.pdf [9]
^[11] First Post. July 31, 2018. https://www.firstpost.com/world/us-gives-india-coveted-strategic-trade-authorisation-1-status-all-you-need-to-know-about-what-this-means-4856681.html [10]
^[12] Prime Minister's meeting with the President of the United States of America. Press Release – PMO. May 24, 2022. https://pib.gov.in/PressReleseDetailm.aspx?PRID=1827885 [11]
^[13] Ahuja Anil. One Year of India – US iCET: Looking Ahead. https://www.natstrat.org/articledetail/publications/one-year-of-india-us-icet-looking-ahead-114.html [12]
^[14] Fact Sheet: India-U.S. Defence Acceleration Ecosystem (INDUS-X). Feb. 21, 2024. https://idex.gov.in/sites/default/files/2024-02/Fact%20Sheet%20INDUS%20X-Feb%202024.pdf [13]
^[15] Horizon 2047: 25th Anniversary of India-France Strategic Partnership, Towards A Century of India-France Relations”. July 24, 2023. Paras 6.11, 6.12. and 1.4. Joint Statement MEA. https://www.mea.gov.in/bilateral-documents.htm [14]
^[16] Joint Statement: Second India-Australia 2+2 Ministerial Dialogue, New Delhi (20 November 2023)
November 21, 2023. Paras 28 and 32. https://www.mea.gov.in/bilateral-documents.htm?dtl/37284/Joint_Statement_Second_IndiaAustralia_22_Ministerial_Dialogue_New_Delhi_20_November_2023 [15]

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