INDUS-X must overcome regulatory roadblocks in the US, India

defence industry, INDUS-X
The INDUS-X initiative offers exciting possibilities for academia and industry to develop cutting-edge defence solutions, but streamlining regulations is crucial for success.

The INDUS-X initiative marks a significant development in the growing defence cooperation between India and the US, looking to stimulate innovation and strengthen defence capabilities through a collaborative partnership. Launched by the US department of defence and India’s ministry of defence under the Innovation for Defense Excellence (iDEX), this programme seeks to cultivate an ecosystem that promotes groundbreaking advancements in defence technology. 

INDUS-X offers a platform through its diverse events and challenges such as the iDEX Maritime ISR Challenge and the iDEX Underwater Communication Challenge. It enables startups from both countries to innovate and develop solutions for shared defence concerns, thus enhancing the security framework of the Indo-Pacific region. Within this initiative, the Defence Innovation Bridge (DIB) plays a pivotal role in facilitating business-to-business cooperation, connecting startups with venture capitalists and industry leaders across borders to foster innovation and growth in the sector.

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Technology transfer represents another cornerstone of the INDUS-X initiative, facilitating seamless flow of high-end technology between India and the United States. This process is important not only for fostering innovation but also for ensuring that both nations can leverage cutting-edge technologies for mutual defence upgrades. Effective technology transfer under INDUS-X could accelerate the development of sophisticated defence systems, enhancing interoperability between the two military forces. It also presents an opportunity to bridge the technological gap, ensuring that both nations benefit equitably from shared advancements and cooperation.

As the initiative progresses, it will serve as a driver of defence-industrial cooperation and herald a new era of technological exploration, strengthening the strategic alliance between India and the US. However, the promise is not devoid of challenges. The strategic geopolitical implications of the INDUS-X initiative extend beyond mere technological and defence collaborations. By strengthening the defence ties between India and the US, INDUS-X also serves as a diplomatic lever in the Indo-Pacific region, supporting stability and deterring potential adversarial actions.

This enhanced cooperation is aligned with broader strategic objectives, such as maintaining freedom of navigation and building a collective response to regional security threats. The initiative thus not only fortifies defence capabilities but also solidifies the geopolitical alliance between the two democracies, promoting a shared vision for a secure and prosperous regional order.

The collaboration between academia and industry within the INDUS-X initiative is challenging due to their differing operational focuses. Academia prioritises long-term, in-depth research to explore new ideas, whereas industry demands quick, practical solutions to immediate problems. This complicates their collaboration as each has distinct goals and timelines for their research and development efforts.

INDUS-X faces roadblocks

Significant hurdles are present in the Mentor-Protégé Programs offered by the US department of defence. The typical two-year duration is often insufficient for startups to fully develop and test their technologies. These programmes are crucial for nurturing the next generation of defence solutions but frequently fall short in allowing startups to evolve into entities capable of delivering battle-ready and technologically advanced products.

Additionally, the complex regulatory and export controls in both India and the US complicates the innovation path for startups. They often struggle to adapt their strategies and understand specific requirements, which can delay their entry into the defence market and restrict their innovative potential.

Intellectual property considerations introduce further complexity. Startups need to carefully manage their IP when engaging with larger defence firms, balancing the necessity to protect their innovations with the need to share knowledge to secure financial and technical assistance.

The defence sector’s characteristic long gestation periods for technology development, coupled with significant financial risks, pose additional challenges. The substantial initial investments required, along with the uncertain and long-term nature of returns, complicate securing funding for collaborative international projects. Moreover, the sensitive and proprietary nature of defence-related collaborations raises concerns about national security and the potential for IP theft or unauthorised technology replication.

To address these multifaceted challenges, a nuanced and integrated approach is required. Enhancing the academia-industry partnership through joint research centers can align theoretical and practical aspects of defense research, creating an environment where innovative solutions can flourish. Extending the duration and scope of mentorship programs would give startups the necessary runway to develop comprehensive and market-ready technologies.

Utilising Other Transaction Authorities (OTAs) and Technical Assistance Agreements (TAAs) offers a strategic method to streamline bureaucratic processes, allowing startups to more effectively navigate the regulatory landscape. These mechanisms facilitate more direct and efficient engagement with government and defence entities, providing startups with the access and resources needed to accelerate their growth and market readiness.

The journey does not end with simplifying regulatory pathways; safeguarding intellectual property and ensuring equitable collaboration terms are paramount to fostering a healthy, innovative ecosystem. Developing a standardised framework for IP management and benefit-sharing is essential to building trust and encouraging open collaboration among startups, defence contractors, and national defence agencies.

The INDUS-X initiative represents a critical advancement in the Indo-US defence partnership, promising to drive innovation and technological progress. By tackling the challenges of academia-industry collaboration, regulatory navigation, IP management, and funding, INDUS-X can pave the way for a robust defence ecosystem that not only enhances the technological capabilities of India and the US but also contributes to the broader stability and security of the Indo-Pacific region.

(Dhruv Bansal and Anjali Shekhawat are are research associate with CUTS International a global public policy research and advocacy group.)