This article charts the milestones in the India-U.S. defense relationship that led to the formation of the India-U.S. Defence Accelerator Ecosystem, or the INDUS-X, a new defense innovation bridge between the two countries. It tracks the accomplishments made by the INDUS-X so far and evaluates its importance in the current security landscape. It also discusses how this initiative can be expanded to further enhance defense cooperation between India and the United States in the coming years.
Background
One of the most transformational geopolitical relationships since the beginning of the twenty-first century has been that of India and the United States in defense. Following minimal exchange during the Cold War, the relationship thawed on the back of a strong information technology (IT) outsourcing relationship that developed in the 1990s. In 2002, the two countries signed the General Security of Military Information Agreement to permit the exchange of military intelligence. In 2005, the New Framework for the India-U.S. Defence Relationship was signed which delineated some common areas of interest—defeating terrorism, preventing the spread of weapons of mass destruction, and protecting the free flow of commerce via land, air, and sea. These developments were followed by the landmark Civil Nuclear Cooperation Initiative in 2008 that deepened strategic cooperation between the two countries in energy security and non-proliferation.
In 2011, a Memorandum of Understanding (MoU) was signed to promote cooperation in cyber security and establish best practices to exchange critical information on cybersecurity and expertise between CERT-In (the Indian Computer Emergency Response Team) and the United States Computer Emergency Readiness Team (U.S.-CERT). September 2013 saw the release of a Joint Declaration on Defence Cooperation, placing both countries “at the same level as their closest partners.” In 2016, India was recognized as a “Major Defense Partner” of the United States. Both countries followed it up by signing a series of foundational agreements from 2016 to 2023 in military logistics, communications security, and geospatial intelligence, increasing the synergy and interoperability between the two militaries. In 2018, India was granted Strategic Trade Authority-1 (STA-1) status by the United States, permitting it to receive license-free access to advanced dual-use technologies from entities in the United States. The Industry Security Annexe signed in December 2019 was particularly important as it enabled collaboration between private industries of the two countries and offered greater access to defense industrial information.
Apart from growing defense sales to India by the United States, one of the envisaged areas for deepening ties was to find modalities between the two countries for co-developing and co-producing defense systems.
Among these notable initiatives, the Defence Technology and Trade Initiative (DTTI), launched in 2012, aimed to build high-tech collaboration through sustained engagements. It enabled the co-development and co-production of defense systems and suggested that impediments posed by bureaucratic processes be removed. Though the DTTI had a grandiose vision for cooperation and collaboration, it faced challenges such as technology transfer restrictions and a mismatch of expectations between the two sides. The two countries failed to rework the rules and procedures required to put the DTTI vision into practice and potential collaboration projects remained mired in each country’s procedural morass. Reforms to the rules of engagement of the DTTI were made in 2019. This was coupled with India’s release of Section 127 and 128 of the Defence Acquisition Procedure in 2020, expanding the scope for India’s co-development and production with a foreign partner. Meanwhile, the Innovations for Defence Excellence (iDEX) scheme started showing such dramatic results that the DTTI went to the back benches.
Along with a push for indigenization, India’s private defense industry finally began to establish itself. The streamlining of defense exports procedure in India in 2018–19 and the establishment of an online portal to obtain clearances for defense exports not only brought in greater transparency in the permission process but also reduced the time taken for such permissions from several months to days. As a result, India’s defense exports grew thirty-one times between 2014 and 2023. Notably, a significant chunk of defense exports from India were the supply of parts and components to defense original equipment manufacturers (OEMs) in the United States. Moreover, over three-fourths of this growth came from the private sector in the initial years. Later, defense public sector undertakings (PSUs) also recognized the defense export opportunity and joined in. In this way, defense exports marked the initial substantive cooperation between the defense industries on both sides.
India’s defense ecosystem witnessed transformation with the establishment of Innovations for Defence Excellence (iDEX) in 2018. This created a pool of new-age private start-ups which demonstrated that India had the capability to deliver effective solutions for the military’s security requirements. Not only were products built by start-ups under iDEX innovative, they were also just as good, if not better, than the best of technologies in the world. Within a few years of its launch, India had created a defense start-up ecosystem comprising over a thousand extremely sophisticated start-ups in defense and aerospace in new and emerging areas—unmanned systems, swarms, artificial intelligence, quantum communications, imaging sensors, image processing, space-based surveillance, and electromagnetic interference (EMI) shielding and stealth, to name a few. These reforms and developments, including that of iDEX, re-ignited interest from the United States to co-produce and co-develop mutually critical defense products with India.
In 2023, the two countries charted a new mechanism to facilitate the co-development of defense systems, this time with the involvement of the private sector and academia—the initiative on Critical and Emerging Technologies, or iCET. Under this, a defense innovation bridge was launched to connect businesses, accelerators, incubators, investors, startups, and universities from both countries and came to be called the India-U.S. Defence Accelerator Ecosystem, or the INDUS-X.
What Has Been Achieved Under the INDUS-X So Far?
Since its commencement in June 2023, the INDUS-X has been swift to initiate meaningful progress in key areas of defense industrial cooperation between India and the United States. The INDUS-X Senior Leaders Forum (SLF) was established by the Indian Ministry of Defence (MoD) and the U.S. Department of Defense (DoD) to engage with senior leaders from academia and the private sector, and a Senior Advisory Group (SAG) was established to assess all its initiatives. The INDUS-X identified two drivers—the iDEX under the MoD and the DoD’s Defense Innovation Unit (DIU), to lead the promotion of defense industrial collaboration and innovation. The dialogue transitioned from a government-to-government (G2G) engagement to an interaction that involved all stakeholders. The two countries agreed to convene every year as a part of the INDUS-X Summit, beginning with a summit in February 2024 in New Delhi. This annual convention emerged as an important forum for stakeholders, including private enterprises from both countries, to take stock of progress. Additional events at a smaller scale, such as workshops, panels, and discussions, offered space for engagements beyond the G2G level, translating into new commercial linkages.
Since the launch of the INDUS-X, commercial collaborations by major defense suppliers with Indian enterprises, including startups, have been largely successful. In February 2023, General Atomics Aeronautical Systems (GA-ASI) announced three partnerships—The first with 114ai to develop software and AI models for intelligence, surveillance, and reconnaissance (ISR) data processing, the second, with Bharat Forge for the manufacturing and assembling of MQ-9 components in India, and the third, with 3rdiTech in the field of semiconductors. Boeing’s Liquid Robotic is partnering with Indian enterprises to build uncrewed surface vehicles (USV) and bolster maritime domain awareness. Skydio, a U.S.-based unmanned aerial system (UAS) manufacturer, also recently announced a partnership with Aeroarc, an Indian manufacturer.
Under the INDUS-X, direct commercial linkages have also been formed with start-ups from the two countries as a result of proactive joint challenges released by the DIU and iDEX. These joint challenges were established with the aim of developing commercial technologies that can be procured by both governments. The first round focused on two joint challenges in maritime ISR and high bandwidth undersea communications, indicating their alignment with the project areas specified under the Roadmap for U.S.-India Defence Industrial Cooperation, signed in 2023.
Regarding the challenges released by iDEX, the maritime ISR oil spill detection technology is of interest to the Indian Coast Guard, the U.S. Coast Guard, and the Naval Oceanographic Office. High bandwidth undersea communication is of interest to the Indian Navy, the United States Third Fleet, and the Naval Information Warfare Center in the United States.
The prize money for these challenges is a maximum of Rs 15 million on the Indian side and $150,000 on the U.S. side. The technology developed will be retained by the entities developing them, barring government restrictions for national security or other strategic reasons as per extant provisions laid down for iDEX and DIU challenges. Further, a second round of two challenges has also been announced that will focus on space-based ISR, the results for which are yet to be planned. Given the huge response to the first round of challenges, a similar trend may be expected for these challenges as well.
To foster partnerships between academia and startups, the first in a series of international workshops was conducted between IIT Kanpur and Pennsylvania State University on August 29, 2023, comprising over a hundred participants from both countries. The event focused on space and common challenges and practices faced by AI-powered technologies. The event was attended by experts and high-level officials who shared their thoughts on the INDUS-X initiative. In February 2024, the Indian Space Association, the Indian Institute of Science, Penn State University, and IIT, Kanpur, organized an online workshop on developing academia-industry partnerships and building solutions in space, such as for space situational awareness and sustainable space exploration. Workshops were also organized by FedTech and IIT Hyderabad in collaboration with Hacking4Allies to impart best practices to start-ups to cooperate with the United States and Indian defense ecosystem. Hacking4Allies is an accelerator program for foreign companies that aims to solve challenges of mutual interest to the United States. It devises strategies that help companies secure funding, customers, and market presence in the United States. These collaborative workshops aimed to discuss and exchange best practices and expertise in defense research and technology acceleration. They brought together startups and academia from both countries to establish innovation hubs and strengthen their collaboration. An INDUS-X investor strategy session was also organized in November 2023 to explore modalities for joint innovation funding between the two countries to develop technologies identified in the Roadmap for Defence Industrial Cooperation. These programs have broken the ice between the academic and innovation ecosystems on both sides and opened potential future pathways.
The INDUS-X Gurukul Education Series is another initiative launched by the DIU’s National Security Innovation Network and iDEX. Kickstarted at the investor strategy session, the Gurukul Education Series envisages conducting monthly events where government officials and private sector leaders interact with startups from India and the United States to discuss issues pertaining to business development, regulatory regimes, and investor pitches. It aims to ensure timely and periodic dissemination of expert opinions to help startups navigate opportunities and challenges in defense technological collaboration. As of April 2024, three Gurukul sessions have been held—The first session focused on harnessing private capital for defense innovation, the second on the Make in India initiative and International Traffic in Arms Regulations (ITAR) export controls, and the third on integrating and diversifying opportunities in defense supply chains.
Recognizing the importance of testing defense products during research and development, the INDUSWERX consortium was announced at the INDUS-X Summit in February 2024. Comprising industry, academia, and non-profit organizations, this consortium was tasked with identifying mechanisms to help private entities within the INDUS-X network access premier facilities for evaluating dual-use and defense products.
Why Is the INDUS-X Important for Both Countries?
Aligning strategic objectives in the Indo-Pacific to enhance cooperation
The Indo-Pacific Strategy of the United States released in February 2022 reiterated the importance of bolstering security and maintaining a free and open Indo-Pacific region. Towards this, the United States supports a “strong India” as a partner in this regional vision and has expressed that by strengthening the capabilities of the Indian military, both countries can work together to ensure a balance of power across the Indo-Pacific. India, too, supports a free, open, and rules-based Indo-Pacific under its vision of security and growth for all in the region (SAGAR).
The INDUS-X offers a platform for the joint development of military products integral to the maritime security of the Indo-Pacific. This collaboration aims to build a credible deterrence against illegal activities such as blockades of critical sea lanes by adversaries and piracy in the region.
Standardizing protocols for greater interoperability in the long-term
Increased depth and frequency of combined military exercises, both bilaterally and multilaterally, have promoted both sides to advocate for the implementation of standardized protocols across various systems and platforms. India and the United States stand side-by-side in several exercises including Tiger Triumph-24 in the Bay of Bengal for humanitarian assistance and disaster relief (HADR) operations and several multilateral exercises—the Malabar series, the Rim of the Pacific, MILAN, Cutlass Express, La Perouse, and Sea Dragon, among others. There has also been an increased use of U.S. platforms, like the P-8, Apache, Chinook, and MQ-9 aircraft, benefits to both countries holistically. According to the Global Innovation Index 2023, India and the United States have emerged as regional leaders in innovation. Co-production and co-development of defense products offer enterprises in both countries opportunities to learn from and collaborate with each other.
Leveraging India’s human resources and software prowess
The DoD has, in recent years, increasingly turned to non-traditional sources of innovations for defense procurements. India is the world’s leading software destination. It is also a top innovator, with the third-largest ecosystem for startups in the world and houses talent that contributes to 20 percent of global chip design engineers. Partnering with India offers the United States access to a significant pool of talent in emerging technologies. The development of technologies such as unmanned systems driven by automation has become a crucial objective for the United States in light of China’s rapid military expansion. Considering these priorities, the DoD can look towards the technological prowess of India to offer reliable and trustworthy military software solutions. As weapons become increasingly automated and software-driven, collaborating with India could help the United States address the challenge of China’s substantial industrial base and technical talent.
Establishing India as a reliable defense base in the Indo-Pacific
The United States is currently exploring a new multilateral consultation group in the Indo-Pacific to prepare its defense industry arrangement for possible conflicts. As part of this effort, it aims to increase production capacity and enhance supply chains by advancing friendshoring with a few countries, including India. Recent reforms in India’s defense industrial base have positioned it as an emerging supplier of defense products. The United States and its broader network of allies have increasingly shown a willingness to source defense supplies from India, which helps diversify their supply chains and leverage India’s large, young workforce. Foundational agreements and India’s STA-1 status have enabled the United States to progressively expand supply chain partners in the country. For example, Boeing has over 300 supply chain partners in India in the aerospace segment for both defense and civil needs. Lockheed-Martin has over seventy. Raytheon and General Atomics have initiated tie-ups as well. The INDUS-X will further bolster and expand these partnerships.
Creating an alternative defense supply chain in the Indo-Pacific will ensure that the United States and its allies receive defense resources to meet their needs in the region in a timely manner. Bolstering India’s defense industrial base will also dissuade countries in the Indo-Pacific from procuring weapons from mutual adversaries. This approach aligns closely with India’s recent focus on defense exports, particularly on maritime security to countries in the region.
Beyond the defense industrial base, geographical considerations also factor into the INDUS-X cooperation. India offers a strategic location midway on the international sea route that connects Europe, West Asia, and the Pacific Rim and can serve as an important location for the U.S. Navy under its Indo-Pacific Command. An integral aspect of India-U.S. convergence is the potential for India to act as a maintenance hub for U.S. Navy assets in the region. A new beginning in the partnership was marked when U.S. Navy Ship (USNS) Charles Drew visited India for voyage repair for the first time in August 2022. This was followed by USNS Mathew Perry’s visit for repairs in March 2023.
Over the last year, the U.S. Navy has signed three maintenance, repair, and operations (MRO) agreements with Larsen & Toubro, Mazagaon Dock Shipbuilders, and Cochin Ltd respectively, enabling U.S. Navy ships to be repaired at Indian shipyards. Others, like the United Kingdom’s Royal Navy, have also started to explore India as a hub for MRO, reflecting a rising global demand.
As defense technologies become more sophisticated, the demand for periodic maintenance and repairs will also increase. In this context, India can emerge as a hub for MRO for these ships and vehicles. Not only does this present business opportunities, but the MRO of ships also offers Indian shipyards with technical expertise. This is another pillar on which the INDUS-X partnership is built.
In light of this, there is potential for the construction of ships and USVs to fall under the ambit of the INDUS-X. The U.S. Navy plans to develop large, unmanned surface and undersea vehicles that can be critical for surveillance across the length and breadth of the Indian Ocean, ensuring freedom of navigation through the sea routes. India has been building naval vessels and submarines in partnership with countries like Russia, France, the UK, and Germany. There exist opportunities for the building of new-age vessels under the INDUS-X, for India and other countries.
Synergistic growth for the venture capital industry
The growth of the Indian defense start-up ecosystem and micro, small, and medium enterprises (MSME) also offer the United States’s venture capital industry an emerging set of opportunities. Many Indian start-ups have sought, and successfully secured, participation from Silicon Valley. For example, U.S.-based Artiman Ventures’ investment in Tonbo, Accel and IDG Partners in Axio Biosolutions, Intel Capital’s in Saankhya Labs, and WRVI Capital’s in ideaForge. This is a growing trend, with an increasing number of Silicon Valley venture funds looking toward promising start-ups in India. Indian defense and aerospace start-ups are also, in turn, exploring the U.S. market—3rditech, New Space, Astrome, Skylark Labs, and QNu, to name a few.
The Indian venture capital industry, largely focused on software, e-commerce, and fintech, has shown increasing interest in defense and aerospace. The emergence of venture funds like MountTech, focused on defense and aerospace, are a reflection of this growing trend. U.S. venture funds too have started entering strategic partnerships with Indian venture funds in this sector.
According to reports, the United States venture capital market is forecasted to grow from $1.30 trillion in 2024 to $1.94 trillion by 2029 at a compound annual growth rate (CAGR) of 8.25 percent. The growing synergies between India and the United States in defense ecosystems under the INDUS-X can facilitate this trend of growth by offering opportunities to diversify investment opportunities, high-potential start-ups, exposure to emerging defense markets, and strategic partnerships and alliances.
What More Needs to be Done?
Though the INDUS-X has undertaken several initiatives within a year of its inception, it is still a new program that needs to sustain momentum and grow in depth and breadth. Progress in some key areas can be beneficial for the initiative.
Expanding Joint Challenges
So far, the DIU and iDEX have released two challenges in undersea communications and maritime ISR technologies. The initial set of challenges was won by five startups and innovators on each side. The next set of two challenges will focus on space-based ISR. With this as a foundational base, the domains of joint challenges released by both iDEX and the DIU can be increased. So far, only two joint challenges are announced every year. This can be increased to three or four, facilitated by the drawing up of a clear roadmap outlining the thematic areas of interest over the next five years. This roadmap can help private entities from both countries anticipate demand and prepare by securing the necessary investment, capital, and personnel. It will also encourage long-term partnerships between startups and academia to develop capabilities to apply for future joint challenges.
There is a need for greater clarity regarding the procurement of technologies developed under the joint challenges. While iDEX provides the Make-II route, promoting industry funding for prototype development or upgrade of technologies conceived under the joint challenges, it is expected that a similar route would be offered to Indian winners. This needs to be clearly spelled out, if not already done. The current lack of clarity raises many questions—What if winners from the two countries choose to collaborate and split the development process? Will the Make-II route still be available if the domestic value-addition meets the indigenously designed, developed, and manufactured (IDDM) criteria? What if Indian winners are unable to develop the technology successfully or do so with lower capability than their U.S. counterparts? What procurement rules will apply in such cases? To address these concerns, the two governments could consider reciprocal arrangements to accommodate technologies developed by start-ups of the partner country through these joint challenges. If the procurement process remains limited to extant provisions, the joint challenges are merely coordinated announcements and fail to provide benefits of collaboration. To this end, both countries can frame a policy that clarifies the procurement and management of intellectual property rights for projects developed under the INDUS-X joint challenges.
Going forward, the two countries could consider creating a joint project facilitation team (PFT) to mentor the winners and help familiarize themselves with the requirements of both countries’ defense ecosystem.
Certification Labs in India
One of the areas under the INDUS-X where more work is needed is in R&D-related testing and evaluation. Though this has been discussed under the current framework, concrete action is yet to be initiated.
In addition to facilitating access to testing centers under the INDUSWERX consortium, cooperation can be further enhanced through other means. For instance, the United States could share more information pertaining to standards and testing protocols with both the Indian Armed Forces and the defense industry to improve capacity and infrastructure for testing and certification. Indian professional bodies that meet the qualification could be impaneled to test and certify products as per standards in both countries, with the objective of reducing the costs of testing and certification in India. This will facilitate convergence in standards and interoperability among innovations created in the ecosystems of the two countries. Implementing a unified certification mechanism for defense products can also reduce friction and foster new innovations in the Indian ecosystem.
India and the United States can also look towards signing an International Armament Cooperation (IAC) for products co-produced under the INDUS-X. An IAC in this regard will facilitate greater cooperation in R&D, testing and evaluation, procurement, and sustainment to enable both countries to achieve operational, technological, or industrial objectives. It will also help reduce the cost of R&D testing and evaluation in the United States, enhance interoperability between both militaries and give the United States more access to India’s defense industrial base.
Collaboration on Norms to Develop Responsible Defense technologies in Automation and AI
Defense innovation can only be effective if it fosters reliability in the adoption of advanced defense products. India and the United States need to work together to ensure that automated and unmanned defense technologies are reliable and deployed responsibly. While the United States is engaging multilaterally through its Political Declaration on Responsible Military Use of AI and Autonomy with endorsements from fifty-two countries, a similar arrangement with India under the INDUS-X can ensure that the private sectors of both countries are involved in developing trustworthy, AI-based defense applications. Increased reliability of these applications can also boost exports to other countries, including those in the Indo-Pacific.
Joint Innovation Fund and Accelerator Program
India and the United States can work towards establishing a joint innovation fund that offers capital to companies looking to build technologies crucial for both countries’ security. This can also be done through accelerators—institutions that support early-stage entities like startups through education, mentorship, and financing.
Currently, iDEX and the DIU operate with their own funds. Creating a common pool of capital to specifically fund startups working on the common technological areas under the INDUS-X challenges would make resource deployment more efficient. This could also allow for more projects to be taken up under the same resources. A joint innovation accelerator program with collaboration from accelerators, incubators, and test centers from both countries can be envisaged to help startups receive funds to develop, test, and demonstrate technologies in the markets of the two countries. For example, in 2021, the North Atlantic Treaty Organization (NATO) established the Defence Innovation Accelerator for the North Atlantic (DIANA), a network comprising twenty-three accelerators and 182 test centers to help private companies from NATO countries build technologies to solve their security challenges. A suitably adapted version for India and the United States could be explored.
Talent
Another important focus of the INDUS-X should be the mobilization of talent between the two countries. The INDUS-X should continue to expand its commercial ties beyond the G2G level, facilitating the exchange and mobility of skilled personnel between the defense industries of both countries. The U.S. Department of State’s International Visitor Leadership Program (IVLP) enables entrepreneurs from other countries to visit key facilities in the United States. Recently, space entrepreneurs from India visited the United States and were briefed on U.S. commercial space law, policy, regulation, and other issues. In the future, the U.S. Department of State may select a cohort of entrepreneurs and leaders from Indian defense startups to visit and experience the U.S. defense industrial facilities and processes.
The INDUS-X could also initiate a fellowship for students interested in R&D for dual-use technological domains, similar to the Quad STEM Fellowship that was convened in 2020, sponsored by aerospace-defense and IT giants such as Boeing, Accenture, and Google.
Renewing the Roadmap
Updating the India-U.S. defense relationship framework and establishing a fresh roadmap will be an important move in the India-U.S. defense industrial cooperation, considering the current framework will expire in 2024. The new framework can add impetus to the INDUS-X by prioritizing joint training and capacity-building initiatives, with a focus on modern warfare technologies such as autonomous systems, which were not included in the previous defense roadmap.
