INDUS X: Is the India-US Defence Acceleration Ecosystem Catching Steam?

Without the right investments, start-ups will struggle to scale. The event offered insights regarding start-up plans for the defense sector and future strategies to scale.

By Colonel Baljinder Singh Retd.

What started as a small step taken by the National Security Advisors (NSA) in January 2023 to launch an “Innovation Bridge” to connect American and Indian defense start-ups as part of the U.S.-India initiative on Critical and Emerging Technology (iCET) seems to have taken a mammoth leap.

A two-day event was held earlier in Washington D.C. against the backdrop of Prime Minister Narendra Modi’s State Visit in June 2023, with stakeholders from governments, academic institutions, research organizations, and investors coalesced to develop initiatives to drive the India-U.S. Defense Acceleration Ecosystem (INDUS-X) forward. A few takeaways were areas that needed deeper deliberations – the formulation of the Joint Innovation Fund (JIF), easing cross-border regulations, standardizing certification, and launching of joint challenges for start-upson both sides to work together in finding cheaper advanced technology solutions.

USISPF and IndUS Tech collaborated along with the Defence Innovation Unit (DIU) and the Defence Innovation Organisation to host the second edition of the INDUS-X with a focus on the aspects pertaining to the Joint Innovation Fund (JIF), advancing the future defense capabilities by recognizing investment opportunities in the defense sector and launching a mechanism titled the Gurukul Series – focused for start-ups and investors to navigate through processes of accelerating defense innovations.

Joint Innovation Fund

The collaboration in defense innovations and technology between Washington and New Delhi is hinged precariously on the availability of funds to support startups in conversion of the technology into niche products that can be marketed. As of now, these start-ups are fending for themselves which makes it harder and prolongs the period in securing investments and moving higher up the chain of technology development from TRL 2 to probably TRL 5 or 6. The thesis for formulating the JIF, with contributions from the Small Industries Development Bank of India and the U.S. International Development Finance Corporation with an entire modus operandi of the amount dispersible as a loan and for a maximum tenure would largely aid the emerging startups to commercially scale up the advanced technologies. For both governments, the discussions hinged around finding measures that can establish a sustainable commercial foundation for defense collaboration and co-production and their role in de-risking investments in startups.

A focused discussion with select participants comprising of thought leaders, including start-ups, investors, government officials, and business leaders from the defense industry to ponder about ‘Investment Opportunities in the Defence Sector’ and investors’ firm commitments to invest in deep tech defense start-ups in India would lay the groundwork for deeper and more sustained collaboration.

Startups- Investors Connect & Gurukul Education Series

Without the right investments, start-ups will struggle to scale. The event offered insights regarding start-up plans for the defense sector and future strategies to scale. Leading Indian and American investors and VCs got a front-row seat on technological advancements in the defense and space sectors across both countries, especially after the success achieved by India in the launch of the Mars Orbiter Mission in 2013 followed by the monumental achievement of Chandrayan-3 in 2023, the latter achieved at a far more economical rate than their Western space agency counterparts.

The insights also provided tangible reasons for investors to contemplate investments in this sector and how they could gainfully contribute to the program of INDUS -X. Investors and VCs also offered insights regarding their expectations from defense start-ups.

The Gurukul Education Series was an initiative by the governments to educate start-ups and investors about the policies and opportunities in the defense ecosystems across both countries and joint efforts to drive technological advancement to foster innovation. This initiative is a step in the right direction to help navigate the defense ecosystem for both Washington and New Delhi. The Gurukul Series will have sessions for start-ups and investors by experts from both sides.

Prognosis

The second INDUS-X meeting in India held on the sidelines of the 2+2 Ministerial dialogue in New Delhi set the stage for meaningful U.S.-India collaboration on defense innovations. Discussions involved think tanks, investors, accelerators, and incubators along with government representation headed by Mr. Vivek Virmani from the iDEX and Mr. Doug Beck from the DIU made headway on the joint innovation fund and expounded on the scalability of the projects.

The investors and start-upsrecognize the importance of the fund and the need for support through faster procurement processes. However certain questions remain unanswered about the mechanism of setting up the joint innovation fund, and its viability in the light of commercial necessity versus the need to innovate as funding, mentorship, and access to the market remain catchpoints for the start-ups.

The author is Director Aerospace and Defence of US-India Strategic Partnership Forum (USISPF).

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