Editorial: Defence non-startups

Meagre funding and bureaucratic maze make the Centre’s defence startup programme a failure

Despite being a good idea, the Centre’s defence startup initiative, aimed at encouraging commercial technology projects to make defence prototypes, has failed to take off. It joins the long list of initiatives that have become victims of stifling bureaucracy. The iDEX, initiated by the Defence Innovation Organisation (DIO) of the Department of Defence Production (DPP), has not yielded a single prototype in the last three years. Meagre funding and the bureaucratic maze are the reasons for its failure. The government had held multiple rounds of startup challenges and selected 84 players, but nothing has taken off so far. Since the iDEX (Innovations for Defence Excellence) agreement does not guarantee procurement, the selected startups are left high and dry and have no incentive to scale up innovative ideas. Apart from inadequate funding, the frequent and sudden changes in the programme’s terms and conditions are proving to be a dampener. One of the changes to the agreement, made unilaterally by DIO in mid-2020, effectively sought greater control of the intellectual property (IP) of the selected startups. Though the programme was launched with much fanfare to find creative defence solutions for the armed forces and to foster self-reliance, it has failed to yield any meaningful defence capabilities while those who were chosen for grants have found the terms of the programme frustratingly fickle. The selected startups are given a conditional grant of up to Rs 1.5 crore. Of this, only 10% is given upfront, with the rest disbursed in instalments based on meeting milestones related to prototype development.

In a research-heavy, capital-intensive pursuit such as defence design and development, this structure is hardly ideal. There is a need to increase the size of the grant to at least Rs 5 crore. In addition, steps must be taken to make the grant more easily accessible for promising startups, small and mid-sized companies, and individual innovators. Even as startups grapple with funding challenges, they must also deal with the ever-changing demands of the armed forces. Often, startups say the armed forces went back and forth in defining the challenge to be solved. This causes a delay right at the outset. The mandate of iDEX is to oversee development of prototypes. The question whether these prototypes will be eventually inducted in the armed forces is not clear. As a result, the government’s commitment to the programme becomes doubtful. The iDEX initiative was inspired by a similar programme — Defence Innovation Unit (DIU) — launched in 2015 by the US Department of Defence. In contrast to the meagre funding in India, the DIU’s research and development budget for the year ending September 2021 was $66.9 million. Nearly half of all the startups working with DIU are given a $1-million grant.

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