Dr. Shayesta Nishat Ahmed, Research Analyst, Defence Economics and Industry Centre, Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA), delivered a presentation on “iDEX: The Future of Defence Startups” at the Monday Morning Meeting held on 13 May 2024. Mr. Arvind Khare, IDAS, Senior Fellow, Defence Economics and Industry Centre, MP-IDSA, moderated the session. Ambassador Sujan R. Chinoy, Director General, MP-IDSA, Gp. Capt. (Dr.) Ajey V. Lele (Retd.), Deputy Director General and the scholars of MP-IDSA attended the meeting.

Executive Summary

Innovation for Defence Excellence (iDEX), is a flagship programme of Department of Defence Production (DDP) under the Ministry of Defence (MoD), in collaboration with Start Up India and Atal Innovation Mission (AIM), unveiled by Prime Minister Narendra Modi in April 2018. The objective of iDEX is to further self-reliance and Atmanirbharta in Defence and Aerospace Sector by way of extending financial support to Startups and individual innovators for indigenous innovations in relation to technology projections and existing technology gaps.

Detailed Report

Mr. Arvind Khare, IDAS, Senior Fellow, initiated the meeting by providing a brief outline of iDEX. Dr. Shayesta Nishat Ahmed, Research Analyst, began her presentation by providing an introduction of what exactly iDEX is, as a Scheme for granting funds, its aim, the existing procedure and its performance so far. iDEX initiative aims at promoting India’s defence indigenisation and self-reliance by rapidly incorporating innovations in weapon technologies and systems procurement by startups and individual innovators. She brought out the rationale behind the quest for achieving indigenisation in the defence sector is reducing import dependency and achieving strategic autonomy. The iDEX framework was developed in collaboration with Start Up India, Atal Innovation Mission (AIM), and Make in India programs.

Apart from the objectives of iDEX, the presentation also included the modus operandi of iDEX functioning to facilitate granting funds from the Defence Innovation Fund (DIF) for innovations. iDEX aims to foster the fast development of indigenous but innovative technologies for defence and aerospace by engaging with competent startups, and to empower a culture of technology co-creation and co-innovation in the Defence R&D ecosystem.

The presentation highlighted the institutionalised structure of Defence Innovation Organization (DIO), which is a Section 8 company executing the iDEX scheme. The process of identification of a technology gap area, selection of competent startups, granting necessary funds, monitoring the execution of projects and assessment of fund utilisations by the startups under the iDEX scheme was elaborated. The presentation also covered the provisions of Defence Acquisition Programme (DAP) 2020 regarding iDEX and the Technology Development Fund (TDF) scheme of the Defence Research & Development Organisation (DRDO), and their differences in structure, budgeting, execution & monitoring of the projects and their funding mechanisms. Following that, Dr. Shayesta delineated the ‘Support for Prototype and Research Kickstart’ (SPARK) framework, through which iDEX provides grants to startups and MSMEs to develop functional prototypes for the required technologies. Various programmes that run under the iDEX set up such as the DISC Challenges, iDEX4Fauj, iDEX Prime (Space) for Mission DefSpace, iDEX Prime (Sprint) for Indian Navy, etc. and the amount of grants per project under different variants of iDEX were also discussed.

Recent developments under iDEX umbrella, viz. INDUS–X and ADITI were also discussed. India-United States Defence Acceleration Ecosystem (INDUS-X) was launched in Washington DC, USA on 21 June 2023, in an event co-organised by iDEX (Ministry of Defence, Government of India) and US Department of Defense, and hosted by US-India Business Council (USIBC), for co-development and co-production of advanced technologies by Indian and US Startups by developing suitable mechanisms for future collaboration across industries, academia, and investors. ADITI (Acing Development of Innovative Technologies with iDEX) is an encouraging endeavour of iDEX, DIO, DDP for extending financial supports up to Rs. 25 Cr. per project relating to innovation in critical and strategic deep-tech technologies.

Dr. Shayesta spoke on the role of partner incubators in iDEX, which provide mentorship and support to iDEX winners, and of the iDEX Investors Hub, which aims to accelerate the growth of the defence ecosystem by providing access to interested investors. The process of prototype development, commercial solicitation, and IPR management under iDEX was also discussed. She also highlighted in her presentation, challenges of the iDEX initiative, including difficulties in monitoring the development of critical defence technologies, lack of user involvement, less commercial proliferation of the developed technologies, IPR issues, accountability aspects, etc.

Questions & Comments

Before opening the floor for a Q&A session, Mr. Arvind Khare, IDAS noted that the concept of iDEX, i.e. involving small & focused teams for getting rapid technological solutions in the form of startups under a government funding mechanism, is not something new in the defence innovation ecosystem worldwide. He quoted the examples of the establishment of MIT Rad Lab by the US Department of Defense in the 1940s and the establishment of Defence Innovation Unit Experimental (DIUx) in 2015, to involve the startups in defence innovations. He also mentioned the Maf’at, a joint administrative body of the Israel Defence Forces (IDF) & Israel’s Ministry of Defence and touched on other similar frameworks in Israel such as ‘Yozma’, ‘Lotem’, ’Unit 8200’ of Israel. He also referred to the ‘European Defence Fund’ having sharp focus on engagement with and investment in SMEs, startups and midcaps for the defence industry.

The Director General, Ambassador Sujan R. Chinoy began his comments by complimenting Dr. Shayesta for a comprehensive presentation. He mentioned that during the 1950s the focus was on heavy industries in India and also there was reduction in defence budget. Later, there was a realisation within the country about the significance of prioritising defence R&D and innovation especially in critical supply chains, in order to attain strategic autonomy. Moreover, since defence production was solely dependent upon Defence Public Sector Undertakings (DPSUs) and due to lack of investment & interest in the Private Sector for R&D in the defence sector, there was a serious necessity for government funding to the private sector, particularly to MSMEs and Startups for encouraging them for innovations and R&D. Now the time has come where schemes like iDEX and TDF are doing wonderful work for involving MSMEs and Startups to become part of the defence supply chain. However, Amb. Chinoy also emphasised that more systemic and robust changes are required to make these funding schemes more accountable, responsible, target-oriented and business-focussed; and elaborated upon the need for removing bureaucratic hurdles and red-tapism in implementation of such initiatives. Amb. Chinoy also expressed the need for formation of a Technology Commission for steering futuristic technological developments involving all stakeholders like Armed Forces, DRDO, DPSUs, private industries (MSMEs & Startups) and strategic collaborations with foreign partners.

During discussions, the issue of IPR, possibility of certain companies with inimical interests attempting to acquire startups, absence of any regulatory mechanisms for monitoring the performance of startups under iDEX funding, ways & approaches to enhance the participation and engagement of competent startups, and lack of information about cancellation of projects due to non-fulfilment of quality requirements and about lack of transparency in identification of incubation centres, along with the contributions of the project directors in the technology development milieu, were also discussed.

The Report was prepared by Mr. D.S. Murugan Yadav, Intern, Military Affairs Centre, MP-IDSA.