As the world witnesses rapid technological advances, continuous investment in research and development (R&D) has become a compulsion for contemporary military powers. This requires governments to allocate necessary resources for R&D on a continuous basis with the goal of keeping pace with emerging trends. In this context, the Indian government has introduced two different R&D funding programs: the Technology Development Fund (TDF) and Innovations for Defense Excellence (iDEX). This article will focus on these schemes as they offer funding to domestic startups, allowing local entrepreneurs to engage in critical projects requiring large budgets. The, initiatives embody India’s policy to indigenize both the designs and production of defense weapons systems, thus enhancing its defense capabilities.
TDF was the maiden scheme introduced by the Modi’s government in 2014-15 budget with the aim to foster the involvement of the private sector, with a particular focus on startups, and to establish an environment that promotes the development of Indigenous high-tech defense products. Initially, it allocated 100 crore Indian rupees for this initiative in its maiden Union budget for the fiscal year 2014-15. The program remains integral to Modi’s ‘Make in India policy,’ which aims to end reliance on foreign vendors’ defense equipment. The scheme falls under the control of the Indian Ministry of Defense. However, its operational control rests with the DRDO.
Since the inception of TDF in 2016, a total of 334 crore rupees have been provided to different startups and organizations for research in 79 projects, which are considered critical for national security. Out of these, 27 technologies under 10 different projects have matured so far and are ready for the manufacturing phase on an industrial scale. In the wake of this success, the government has increased the maximum amount sanctioned for a single startup from 10 crore to 50 crore Indian rupees, demonstrating growing confidence in the project’s viability.
Following TDF, the Indian government introduced iDEX to augment further the R&D efforts in the defense sector in 2018. The scheme operates at the lower echelon compared to the TDF and offers moderate funding with grants of up to 1.5 Crore Indian rupees to most projects. However, it also offers 10 crore Indian rupees in funding to the projects if the government thinks they are important for national security. So far, the government has allocated 498.78 crore Indian rupees to fund almost 300 startups and entrepreneurs for 2021-2026. As of now, 90 percent of the funds have already been distributed between the different startups. This implies that these two schemes did not have to face the usual bureaucratic red-tapism. The projects under the iDEX have been funded by the Department of Defence Production.
For the purpose of stepping up from the R&D phase to scale large-scale production, the Indian government has established two defence industrial corridors (DIC); Uttar Pradesh Defense Industrial Corridor (UPDIC) and Tamil Nadu Industrial Development Corporation (TIDCO). Establishing DICs ensures that startups have an ecosystem that enables them to manufacture their products rather than sell them to the highest bidder abroad. Moreover, these corridors are expected to boost the Indian defense manufacturing capabilities as the present capability so far has been unable to meet the demands of the Indian military.
Despite the program’s success story, the schemes also have some shortcomings. The TDF still lacks substantial progress in maturing critical emerging technologies like Quantum Computing, Artificial Intelligence (AI), and other associated critical technologies. Moreover, the technologies developed so far have not been able to reduce the significant reliance on foreign firms. There have also been delays reported in clearance for large-scale production of mature technologies.
Both programs will benefit India in various ways. It will significantly reduce its reliance on foreign suppliers to fulfill defense requirements. This will also boost the readiness of Indian tri-services while facilitating maintenance efforts and spares availability. In addition, indigenization programs tend to cut manufacturing costs, especially in foreign currencies, and enable the sizeable economic production of related military equipment.
Looking at the program’s current status, it will take at least another five years to start manufacturing the developed projects on an industrial scale. Nevertheless, both schemes serve the primary objective of India’s ‘Make in India’ policy,’ and the government will continue to fund these schemes because they appear to be a good option for achieving self-reliance while promoting its political goals.
In the case of Pakistan, a similar scheme named the ‘Technology Development Fund’ for the research and development of emerging technologies exists as well, which is run by the Higher Education Commission (HEC). However, the funding through this initiative is not restricted to defence projects only. In fact, the considerable focus of the research through this fund has been on projects related to UN-led Sustainable Development Goals. The fund provides a maximum grant of 14.00 million rupees to each university. However, in the wake of rising inflation and rupee devaluation, this amount is considered insufficient to support the intended research projects.
Thus, while a government initiative on R&D does exist in Pakistan, the focus and funding of this project are not likely to provide an impetus to indigenization efforts in the defense sector. Therefore, there is a need to create a funding program for R&D projects exclusively for the defense sector with a higher upper limit to attract entrepreneurs and academia for directed research. To further enhance the output, it can be merged with the project like NASTP as offers a conducive ecosystem that promotes entrepreneurship. This option is likely to address the issue of restricted foreign exchange and inaccessibility to new technologies.
Conclusively, the Indian government’s recent R&D schemes are part of New Delhi’s broader stratagem to boost its defense industrial base capabilities vis-à-vis Pakistan. The rate at which New Delhi is sanctioning funds for the R&D projects will allow its domestic industry to manufacture new products at a rapid pace because they no longer have to wait for technological innovations. The scenario implies that India will likely be better positioned to build and manufacture advanced weapons and armaments in the conventional and nuclear realms. This will boost New Delhi’s war-waging potential, a worrisome sign for Islamabad. Therefore, it is recommended that Pakistan should launch a new dedicated R&D scheme solely to promote defense innovation urgently.
Author’s Bio:
Usman Haider:
Usman Haider has an MPhil degree in Strategic Studies from the National Defense University, Islamabad, Pakistan. The author’s research interests include military strategy, doctrine, arms, defence policy of India, and strategic stability in South Asia.
Mahnoor Saghir:
Mahnoor Saghir is an cc from the International Relations Department at the National Defense University, Islamabad. Her research areas include; Emerging Technologies (Hypersonic & UAVs), Russia-Ukraine Conflict, and the Security Dynamics of South Asia.
