RAHUL BHATIA, KONARK BHANDARI
INTRODUCTION
India and the United States are set to launch INDUS-X, an innovation bridge under the initiative on Critical and Emerging Technology (iCET) that will connect the defense innovation ecosystems of both countries. India and the United States hold defense cooperation as a major pillar of their strategic partnership, and defense ties between the two countries have deepened considerably over the last two decades. However, defense innovation cooperation has been noticeably absent from the relationship. Could INDUS-X bridge this gap?
THE EMERGENCE OF THE INDIAN DEFENSE AND SPACE PRIVATE SECTOR
Over the last decade, the emergence of the defense private sector in India has opened new avenues of cooperation with the United States. Some American companies have already partnered with Indian entities to leverage their low-cost production capabilities. For instance, Boeing and Lockheed Martin have established joint ventures with the Tata Group to manufacture fuselages of Apache AH-64 helicopters and wings for F-16 fighters, respectively. General Electric has similarly partnered with Indian firms such as Tata, Mahindra, and Godrej to manufacture aero engine components.
Rahul Bhatia is a research analyst with the Security Studies Program at Carnegie India. His research focuses on India’s borders and India’s foreign and defense policies.
More importantly, for the defense innovation bridge, India is now home to a budding defense and space startup ecosystem. Today, Indian defense startups are developing a wide spectrum of cutting-edge technologies for the Indian armed forces to employ. These range from unmanned platforms and body armor to surveillance systems and advanced imaging capabilities. The Indian Army has recently procured unmanned aerial systems (UAVs) or drones from Indian defense startups such as ideaForge, NewSpace Research & Technologies, and Raphe mPhibr to enhance its surveillance capabilities along the India-China border and transport supplies to soldiers in forward posts.
Indian space startups, too, have been abuzz with activity since the Indian government announced its plans to liberalize the sector in 2020. Skyroot Aerospace recently launched India’s first private rocket and aims to put a satellite into orbit this year. Digantara, another startup, has built an observatory to track space debris and military satellites over the South Asian region. Some space startups, such as Pixxel and Dhruva Space, have also committed to building satellite manufacturing and assembly facilities—something that would benefit from scale if there were a possibility to build for defense applications as well.
THE SCOPE OF INDUS-X
Made possible by the emergence of a defense and space private sector in India, INDUS-X has the potential to facilitate a wide array of defense innovation cooperation. To begin with, it could provide matchmaking services between Indian and American defense entities. While organizations such as the U.S.-India Business Council (USIBC) already provide similar services, INDUS-X could focus its efforts on connecting Indian and American startups to established defense companies, venture capitalists, incubators, accelerators, universities, and so on.
Konark Bhandari is an associate fellow with Carnegie India.
It could also go a step further and facilitate the creation of mentor-protégé partnerships between startups and large defense companies. The U.S. Department of Defense (DoD) already has a long-standing Mentor-Protégé Program that partners small businesses with larger companies. Here, large defense companies (mentors) are incentivized to assist small businesses (protégés) in becoming a part of the U.S. military’s supply chain. In essence, by partnering them with mentors, the program enables small defense companies to compete for DoD contracts that they would otherwise be ineligible for. The program further assists protégés in developing their technical capabilities and allows them to take advantage of their mentor’s business development acumen. INDUS-X could create a similar model where Indian startups could be mentored by American defense companies, and American startups could be mentored by Indian defense companies.
INDUS-X can also play a key role in bridging a vital information gap. Indian defense and space startups often lack the know-how required to navigate the American regulatory environment and Washington’s procurement process. INDUS-X could familiarize startups with the processes involved. Furthermore, the defense innovation bridge could serve as a troubleshooting mechanism, especially when it comes to Indian and American startups applying for an assortment of regulatory clearances in each other’s ecosystems—something that has been a cause for concern in the past as well.
JOINT FUNDING MECHANISMS
India and the United States can also use INDUS-X as a vehicle to create jointly funded initiatives. The two countries already jointly fund the Partnership to Advance Clean Energy (PACE), the Nehru-Fulbright Scholarship, and the Indo-U.S. Science and Technology Forum (IUSSTF). A similar initiative for defense innovation would not be unfeasible. Moreover, there is already a blueprint for a joint pitch day. In 2020, the United States and the United Kingdom launched International Space Pitch Day to fast-track innovation that could benefit military operations in space. Jointly funded by the two countries’ air forces and the British Defence Science and Technology Laboratory, the initiative gave startups from around the world an opportunity to develop ideas based on specific challenges and then pitch those ideas to military leaders. At the end of the competition, ten startups were awarded short-term joint contracts from a $1 million fund to develop their products further.
India and the United States could easily replicate such a joint pitch day. The earmarked funding is modest, and the duration of the projects is short. Moreover, the Indian defense and space startup ecosystem is already familiar with such a model. Innovations for Defence Excellence (iDEX), an initiative by the Indian Ministry of Defence, awards grants to startups to support product development along similar lines. iDEX now also includes challenges as a part of Mission DefSpace, which specifically focuses on developing innovative solutions for defense forces in the space domain.
KEY CHALLENGES
Perhaps one of the larger sticking points when it comes to any possible defense innovation cooperation roadmap would be to sort out the existing procurement issues. On the U.S. side, this may require incentivizing the DoD to consider vendors outside of their industrial base. Currently, there is authority under the U.S. Defense Production Act, 1950, to revise the meaning of the phrase “domestic source” to include other nations as well. The Biden administration recently announced its intention to enact such an amendment for Australia. However, it should be noted that Australia is already a Five Eyes country. It is also a legally defined member of the U.S. National Technology and Industrial Base. This entitles people and organizations within Australia to supply to the U.S. armed forces. Whether a similar treatment could be on the cards for India is something that would have to be discussed at the highest level.
Apart from this, any form of defense innovation cooperation would likely face the final hurdle of U.S. export controls, which could possibly render the entire exercise impractical. The export controls exist for a good reason: to prevent the proliferation of critical technologies among hostile and adversarial actors. However, a fine balance has to be struck. Key technologies should be protected while also ensuring that businesses do not spend an inordinate amount of time complying with export control laws.
Most Indian startups have spoken about the U.S. International Traffic in Arms Regulations (ITAR) being a roadblock to further cooperation. Based on stakeholder feedback from a few Indian space companies, the ITAR is sometimes cited as a factor in thwarting even preliminary discussions with potential U.S. vendors. For instance, on occasion, the extreme sensitivity of the technology being discussed with prospective buyers renders it subject to the ITAR and hinders such a preliminary discussion. This could be a problem not only for Indian firms as potential recipients of advanced technologies but also for American ones. This is because the strict enforcement of ITAR rules could potentially lead to Indian firms looking to non-American defense firms. Such defense firms could end up designing products that specifically do not need any ITAR-regulated parts.
CONCLUSION
Overall, INDUS-X provides a unique opportunity for India and the United States to step up defense innovation cooperation. Enabled by the emergence of the defense and space startup ecosystem in India, the initiative is rightly positioned to build on the successes of the Defense Technology and Trade Initiative and complement other areas of defense cooperation between the two countries. However, tangible India-U.S. defense innovation cooperation will require consistent interaction between the two countries’ defense innovation ecosystems. To facilitate this, the two countries should look to institutionalize INDUS-X and make it self-sustainable. Furthermore, India and the United States will have to continuously engage with each other at a high level to resolve the key bottlenecks of procurement and export controls.
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