RAHUL BHATIA, KONARK BHANDARI
INTRODUCTION
By any reasonable standard, Prime Minister Narendra Modi’s U.S. visit in June 2023 was a success. As the subsequent factsheet stated, many significant deals were struck, and many previously announced bilateral initiatives were inaugurated.
Among the initiatives launched during the visit was the India-U.S. Defense Acceleration Ecosystem (INDUS-X), a defence innovation bridge envisioned to bolster defence industrial cooperation between both nations. The inaugural summit convened frank and detailed discussions on a wide range of issues related to India-U.S. defence industrial cooperation. Opportunities for corporate mentor-protégé programs were identified, and even the minutiae of export control laws were thoroughly examined. The event concluded with the release of a collaboration agenda that outlines an assortment of objectives along with a plan for tracking progress toward achieving them. The agenda is wide-ranging in nature and will need a whole-of-government approach to meet the ambitious targets it envisions.
In two weeks, President Joe Biden will arrive in India for the G20 Leaders’ Summit. This creates an opportunity for both countries to keep the momentum on INDUS-X going and hammer out some key deliverables in the short term. The importance of quick wins in the area of defense-industrial cooperation cannot be emphasized enough. While defence trade between New Delhi and Washington has grown steadily since the landmark nuclear agreement in 2005, the two countries have a less-than-satisfactory record when it comes to defence-industrial cooperation. Nonetheless, India and the United States have identified key areas of defence industrial cooperation at the inaugural INDUS-X summit. They must now strive toward tangible outcomes on an accelerated timeline. This commentary highlights how the two countries can work out some quick wins.
A JOINT INNOVATION FUND
A good starting point for the two countries would be to set up a joint innovation fund similar to the United States–India Science & Technology Endowment Fund. This fund could be used to foster research and development of defence technologies of mutual benefit. It could also be used to issue grants to help startups develop their products and fund joint innovation challenges. While the two countries have not specified which defence technologies to collaborate on under INDUS-X, they did release a roadmap earlier this year, which identifies potential areas of defence cooperation. These include intelligence, surveillance and reconnaissance platforms, and undersea domain awareness. A joint innovation fund could be used to aid startups working in these areas, thereby furthering defence industrial cooperation.
Although the INDUS-X fact sheet envisions the joint innovation fund as a public-private partnership, given the general apprehension of private investors when it comes to the defence sector, the Indian Ministry of Defence and the U.S. Department of Defense (DOD) will have to take the first step. The two government agencies should look to kick things off by providing some capital, no matter how modest, to initiate the joint innovation fund. They could then work with startup incubators and think tanks to engage with venture capitalists and private investors to secure further resources. Funding support is especially important for Indian defence startups, and it should form the bedrock of a defence acceleration ecosystem.
AN ACCELERATOR PROGRAM
India and the United States can also look to establish an accelerator program for defence startups in the short term. Here, the two countries could consider constituting a Hacking4Allies chapter for India. Hacking4Allies is an American accelerator program specifically designed for foreign companies. It sees them addressing challenges that are in the mutual interest of both the United States and the partner country. For instance, a recent Hacking4Allies pilot program run between the United States and Norway from 2019 to 2021 saw four Norwegian deep-tech startups work on problem statements common to Washington and Oslo’s defence and security interests.
Hacking4Allies follows the methodology pioneered by Hacking for Defense, a university course first offered by Stanford University. It sees companies work closely with the end user (that is, the military or government stakeholder) to develop solutions for them. The intent behind the program is to provide startups and scale-ups with business advisory and networking support. In essence, Hacking4Allies formulates strategies for foreign companies to find investors, identify customers, and establish themselves in the American market.
Following the successful pilot, the United States and Norway have established an annual Hacking4Allies program cycle. Furthermore, the United States and Australia are now undertaking a Hacking4Allies pilot for Australian companies. It is only logical that India and the United States work on replicating this model.
MENTOR-PROTÉGÉ PROGRAMS
Another key area that warrants discussion is the mentor-protégé program (MPP). The idea of establishing an MPP between India and the United States stems from the current MPP of the DOD. Here, the DOD attempts to pair an established defence firm with a small business. We have previously spoken about the scope of MPPs. However, there are certain issues with the current MPP program that would benefit from modification.
To begin with, the number of mentors under the MPP is considerably limited; only 0.2 per cent out of the 15,000 suppliers to the DOD currently serve as mentors. Thus, the two countries will have to ensure they are able to attract enough mentors.
Further, the standard tenure of contracts under the DOD’s MPP is two years. Given that the volume of prime subcontracts only starts increasing around year three, perhaps a two-year MPP is too short to make an impact on protégés. Apart from this, startups fail at very high rates in their initial years, so taking stock of the MPP over a two-year period may not provide the most accurate picture of the technological maturity of corporate protégés.
Lastly, it is unclear how comfortable defence startups would be with sharing their intellectual property (IP) with established defence primes. While securing a technical tie-up and financial assistance from a defence prime does validate the protégé’s technological capabilities, striking the right IP-sharing balance would be equally important.
ACADEMIA-INDUSTRY PARTNERSHIPS
While industry partnerships are relevant, innovation cannot be sustained without involving academia. This is not limited to the realm of defence technologies but is a sector-agnostic observation. Accordingly, the two countries need to create academia-industry partnerships that can enable the seamless exchange of best practices in defense innovation. However, a few stumbling blocks remain before this is achieved. For instance, owing to the long-term nature of academic research, academia usually has a longer horizon when it comes to the gestation of defense technologies. Apart from this, funding from public-private sources will need to focus on an equitable model of funding. For example, the Association of American Universities recently identified one in which those funding collaborative research do not focus on a “dollar for dollar” model that is skewed owing to the difference in research costs in India and the United States. Instead, the focus should be on outputs, with each side committing to deliver, say, a fixed number of Ph.D. graduates or develop their respective laboratories for expertise in certain critical technologies.
WHAT’S AT STAKE?
At its core, INDUS-X is truly a mutually beneficial initiative. For India, it serves to catalyze its military modernization efforts and boost indigenous defence capacity. For the United States, it helps shore up its defence industrial arsenal. The war in Ukraine has demonstrated how quickly American stockpiles of munitions can be depleted. The co-development and, eventually, co-production of defence systems with countries such as India could be a way to replenish these capabilities over the long term.
Defence industrial cooperation is the missing link in an ever-expanding strategic partnership between India and the United States. INDUS-X could serve to bridge this gap. It also has the potential to resolve pressing issues between the two countries and could provide a platform for long-term defence cooperation.
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