8-Aug-2022: Defence Start-Ups

Innovations for Defence Excellence (iDEX) framework was launched by the Government with the aim to foster innovation and technology development in Defence and Aerospace Sector by engaging Industries including MSMEs, start-ups, individual innovators, R&D institutes and academia and promote self-reliance. Under iDEX framework so far, seven editions of Defence India Start-up Challenge (DISC) have been launched.

Under the iDEX route, the Government focuses on innovation and design & development and supports the start-ups and innovators for successful prototype development. Large number of start-ups have participated in various rounds of Defence India Start-up Challenge. So far, 136 start-ups have been engaged and 102 contracts have been signed for prototype development. Moreover, the Ministry has also accorded Acceptance of Necessity (AoN) for 14 iDEX products, paving the way for placement of orders on the iDEX winners.

The Government has approved a central sector scheme for iDEX with budgetary support of Rs 498.78 crore for the five years from 2021-22 to 2025-26. The problem statements emanating from defence forces are launched under iDEX framework for development of technology and prototypes thus, addressing the real time problems of defence forces.

17-Dec-2021: Defence Startups

The Department of Defence Production, Ministry of Defence has approved a central sector scheme viz. Innovations for Defence Excellence (iDEX)with budgetary support of Rs498.78 crore for the next 5 years from 2021-22 to 2025-26. The objective of the scheme is to provide financial support to nearly 300 Startups/MSMEs/individual innovators and about 20 Partner incubators through Defence Innovation Organisation (DIO). Innovations for Defence Excellence (iDEX) framework aims to achieve self-reliance and foster innovation and technology development in Defence and Aerospace Sector by engaging Industries including MSMEs, startups, individual innovators, R&D institutes and academia. A total of 89 iDEX winners have so far been identified. 35 new problem statements have been launched recently to expand the network, under Defence India Startup Challenge (DISC)-5.

Further, in order to promote startups, DRDO has also launched DARE to DREAM contest and Technology Development Fund (TDF) Scheme.

1. Dare to Dream is a Pan India Innovation Contest to support startups & innovators to contribute in Defence ecosystem. DRDO has been conducting Dare to Dream Contest since 2019. DRDO specifies various themes and invites innovative ideas under those themes. Best ideas are selected and awarded. DRDO also supports awarded ideas to realize them into Prototype through TDF scheme. Two versions of Dare to Dream Contest have already been successfully conducted.
2. TDF Scheme is executed by DRDO under ‘Make in India’ initiative. The Government has approved TDF Scheme to encourage industries especially MSMEs and Startups to develop various defence technologies. The scheme operates in Grants-in-Aid Mode. The scheme was launched in Sep 2016. At present, a total of 37 project have been awarded to various industries specially MSMEs and Startups under TDF scheme.

Procedure for ‘Make-II’ category, which is Industry funded, was introduced in DPP-2016 to encourage indigenous development and manufacture of defence equipment. It has a number of industry friendly provisions such as relaxation of eligibility criterion, minimal documentation, provision for considering proposals suggested by industry/individual etc. So far, 60 projects relating to Army, Navy & Air Force, have been accorded ‘Approval in Principle’.

The steps taken to strengthen Research and Development in defence manufacturing are as follows:

1. Transfer of Technology (ToT) policy with ‘nil’ ToT fee for Development cum Production Partner (DcPP), Production Agency (PA) and Development Partner (DP) has been promulgated by DRDO. No royalty is charged from industry for supply to Indian Armed Forces/Paramilitary/Police Forces. 2% royalty is charged for export and products for commercial markets.
2. DRDO is promoting research by providing Grant-in-Aid funding to various Indian R&D institutions/Universities.
3. 10 Centers of Excellence (CoEs) are operational in various IITs/Universities across India for directed research in identified areas.
4. 108 technologies/products have been exclusively earmarked for R&D leading to product development by Indian industry. DRDO provides necessary support, including testing and certification, wherever necessary/applicable.
5. DRDO patents have been made available to Industry for use at ‘nil’ cost.
6. DRDO test facilities have been opened to industry for testing their equipment products.

Further, following policy initiatives have been undertaken by the Government to promote Defence Exports:

1. Standard Operating Procedures (SOPs) for the export of munitions list items has been simplified to reduce the processing time for export authorizations.
2. A completely end-to-end online portal for receiving and processing authorization permission has been developed. The applications submitted on this portal are digitally signed and the authorizations are also digitally issued.
3. An online portal has been created through which export leads received from various stakeholders are being disseminated directly to the Indian Defence Exporters who are registered on the portal.
4. The Government has notified the Open General Export License (OGEL) - a one-time export license, which permits the industry to export specified items to specified destinations, enumerated in the OGEL, without seeking export authorisation on case to case basis during the validity of the OGEL.
5. A Scheme for Promotion of Defence Exports has been notified to provide an opportunity to the prospective exporters to get their product certified by the Government and provides access to the testing infrastructure of Ministry of Defence for initial validation of the product and its subsequent field trials. The certificate can be produced by the prospective exporter for marketing their products suitably in the global market.
6. A separate Export Promotion Cell has been formed in the Department of Defence Production (DDP) to co-ordinate and follow-up on export related action including enquiries received from various countries and facilitate private sector and public sector companies for export promotion.
7. Defence Attaché (DA) Scheme for Export Promotion has been formulated under which funds are provided to DAs for export promotion of Indigenous defence products of both public and private sector.
8. DPSUs have been allocated certain countries to establish their marketing offices to have focused attention to encourage Defence exports in those countries.
9. Subject to strategic considerations, domestically manufactured defence products are being promoted through Lines of Credit. Defence Lines of Credit (LOCs) are extended to sovereign governments of Friendly Foreign Countries to enable buyers in those countries, to import goods and services from India on attractive credit terms.
10. A High Level Committee (HLC) has been constituted under the Chairmanship of Hon’ble Raksha Mantri to facilitate faster clearances to export of major indigenous defence platforms to Friendly Foreign Countries.
11. Webinars are being organized with Friendly Foreign Countries under the aegis of DDP, Ministry of Defence with active participation from Indian Defence Industries.

2-Mar-2020: Start-Ups Dealing with Defence Production and Indigenisation of Imported Equipment

There has been a surge in start-ups dealing with defence production and indigenisation of imported equipment in last three years. The following initiatives have been taken by the Government to remove entry barriers for private industry including start-ups in the defence domain:

• Innovations for Defence Excellence (iDEX) framework, was launched by the Hon’ble PM in April 2018, with the aim for achieving self-reliance and to foster innovation and technology development in Defence and Aerospace by engaging Industries including MSMEs, startups, individual innovators, R&D institutes and academia. Under iDEX, the projects or problem statements are identified based on the requirements projected by the Armed Forces, OFB & DPSUs. The selected applicants are eligible for grants upto Rs 1.5 Crore for development of the prototype.
• In Make-I category (Govt funded) of development of prototype of defence products/platforms, projects not exceeding development cost of Rs. 10 Crore are reserved for MSMEs/Start-ups. Similarly, under Make-II category of development of prototype of defence products/platforms, projects not exceeding development cost of Rs. 3 Crore are reserved for MSMEs/Start-ups.
• The ‘Make-II’ procedure has been simplified to encourage wider participation of Indian industry, with impetus for MSME/start-ups sector and timely induction of equipment into the Indian Armed Forces. The ‘Startups’ recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) from time to time, are eligible to participate under ‘Make-II’ procedure. In addition, the framework for implementation of ‘Make-II’ at OFB and DPSU level has also been notified. More than 2500 items have been notified by OFB and DPSUs for development under ‘Make-II’.
• Department of Defence Production has notified 127 items under Public Procurement Order 2017 issued by Department for Promotion of Industry and Internal Trade (DPIIT).
• Government has notified a ‘Policy for indigenisation of components and spares used in Defence Platforms’ in March, 2019 with the objective to create a domestic industry ecosystem.
• Industrial licensing regime for Indian manufacturers in Defence sector has been liberalized. This has reduced entry barriers for new entrants in defence sector, particularly SMEs.
• FDI Policy has been revised and under the revised policy, Foreign Investment up to 49 % is allowed through automatic route and above 49 % under the Government route.
• Defence Research & Development Organisation (DRDO) has evolved a new industry friendly ToT policy for transfer of DRDO developed technologies to industries. DRDO has also promulgated new patent policy to facilitate Indian industries to get free access to use DRDO patents.
• DRDO has launched a program termed as Technology Development Fund (TDF) for meeting the requirements of Tri-Services, Defence Production and DRDO. The scheme has been established to promote self-reliance in Defence Technology as a part of the 'Make in India' initiative by encouraging participation of public/private industries especially MSMEs.
• A Defence Investor Cell (DIC) was set up by the Department of Defence Production in January, 2018 to provide help, support and guidance to defence industry, MSMEs and start-ups.
• During 2017-2018, DDP had notified 275 items which were previously exclusively sourced from OFB, for sourcing from open industry and 141 items have been placed on Government e-Marketplace.
• Testing facilities: The Test facilities/ infrastructure available with various Government agencies (OFB, DPSUs, DRDO, DGQA, DGAQA & SHQs) have been made available to private sector with the objective to assist them in design & development of defence systems. The details of test facilities, procedure and other terms & conditions are available on websites of respective Government Agencies.
• Third Party Inspection (TPI) of Defence Stores: To align with the Government of India initiative to promote Ease of Doing Business for MSMEs and private sector and achieve national vision of “Make in India”, the Department has formulated Policy Document on ‘Utilisation of Third Party Inspection Services’ for effective administration of inspection function of out-sourced work with involvement of third parties for inspection services.
• Mission Raksha Gyanshakti: This Mission was launched with the objective to encourage IPR for self-reliance in defence. IPR is the key enabler for developing an ecosystem of innovation and indigenization. As part of Mission Raksha Gyanshakti, an IPR Division has been constituted in DDP.