iDEX: India's Plan to Democratize Defence Innovation

The Defence Problem Nobody Talked About

Until 2018, India's defence innovation ecosystem was a closed fortress. Only a handful of large, established players — the Defence Public Sector Undertakings (DPSUs), a few big private conglomerates like Tata and L&T, and foreign original equipment manufacturers (OEMs) — were considered capable of building military technology. A startup with a breakthrough idea, a small team of engineers with a niche capability, an individual innovator with a vision — none of them could even get a meeting.

The system was built on Transfer of Technology (ToT) agreements, which notoriously excluded the "know-why" — the core understanding needed to truly innovate — and provided only "know-how": basic operational instructions. Critical components were often excluded, ensuring long-term dependence on the seller. Military technology was too complex, too capital-intensive, too slow-moving, and too sensitive for non-traditional players to participate.

The result was a system that was slow, expensive, and dependent on foreign suppliers. India was the world's largest arms importer, but its own defence industry was largely an assembly line for foreign technology. The desire for self-reliance — Atmanirbhar in defence — was not new. Private industry entry had been allowed in 2001. But real transformation came with a political push for Atmanirbharta in Defence, backed by strong political will. Key reforms included the launch of iDEX in 2018, positive indigenisation lists from 2020, capital procurement budgets earmarked for domestic industry, and the corporatisation of the Ordnance Factory Board in 2021.

Of all these, iDEX has arguably had the biggest impact — not because it is the largest programme by budget, but because it changed who gets to build defence technology. That structural shift — from a closed club to an open marketplace — is more consequential than any single weapon system.

What iDEX Actually Is

Innovations for Defence Excellence (iDEX) is a government initiative launched by Prime Minister Narendra Modi in April 2018 to foster innovation and technology development in the Defence and Aerospace sectors. But calling it an "initiative" understates what it actually does. iDEX is a fundamental re-architecture of how the Indian government engages with innovators — replacing a closed, relationship-based procurement model with an open, challenge-based innovation marketplace.

The iDEX framework is implemented by the Defence Innovation Organisation (DIO), a not-for-profit company formed under the aegis of the Department of Defence Production, Ministry of Defence. DIO was created by two founder members — Hindustan Aeronautics Limited (HAL) and Bharat Electronics Limited (BEL), both DPSUs. This is worth noting: the very entities that represented the old monopoly are institutionally embedded in the vehicle designed to break it. Whether this creates constructive tension or structural conflict of interest is an open question.

iDEX engages industries including MSMEs, startups, individual innovators, R&D institutes, and academia, providing them with grants, funding, and other support to carry out R&D with potential for adoption by the Indian defence and aerospace sectors. The scheme was launched with a budget of ₹498.78 crore for five years from 2021-22 to 2025-26, with the ambition of providing financial support to nearly 300 startups, MSMEs, and individual innovators.

The design philosophy is the same one that runs through India Stack: the state builds the platform, defines the standards, and runs the challenges. Private innovators compete to solve them. The best solutions win, regardless of who built them.

How iDEX Works in Practice

iDEX operates through a structured pipeline that connects armed forces' operational needs with innovators who can solve them — and crucially, provides a procurement pathway at the end.

Defence India Startup Challenges (DISC)

The primary mechanism is the Defence India Startup Challenge (DISC), where the armed forces and defence establishments release problem statements — specific technological challenges they face in the field. These are not abstract research topics. They are operational problems: a soldier needs better night vision, a warship needs quieter propulsion, a surveillance grid needs AI-based anomaly detection. Innovators are invited to propose solutions, and the selection is competitive.

Open Challenges

Beyond DISC, iDEX also runs Open Challenges, inviting innovators to propose ways to harness their existing technology capabilities to strengthen military superiority — even if the armed forces haven't articulated the need yet. This is the inverse of DISC: instead of the military asking for solutions, innovators propose capabilities the military may not know it needs.

SPARK Grant

Selected applicants receive a SPARK (Support for Prototype and Research Kickstart) grant. The grant can be up to ₹1.5 crore for most projects, and up to ₹10 crore under the iDEX Prime category for more complex, higher-risk projects. Grants of up to ₹25 crore are also offered under the iDEX ADITI (Accelerated Development and Indigenisation for Technological Innovation) challenge. The funding is disbursed in tranches based on the achievement of milestones — not as a lump sum. This milestone-based structure is borrowed from venture capital, and it is a significant departure from traditional defence contracting where payments are tied to procurement cycles rather than technical progress.

Incubation and Mentorship

Beyond funding, selected applicants are given entry to accelerator programmes run by iDEX partners. These programmes provide technology and business development mentorship. Selected applicants may also be supported in terms of access to defence testing facilities and experts for their product and technology development — resources that were previously available only to DPSUs and large private contractors.

The Route to Procurement

This is the part that makes iDEX different from a research grant programme. As per the Defence Acquisition Procedure 2020, procurement through innovative solutions can be undertaken through iDEX. This creates a path from a startup's prototype to being an approved supplier to the armed forces. The pipeline is: problem statement → competitive selection → milestone-based grant → prototype → testing → procurement. Every stage is gated. But for the first time, there is a gate at all — previously, startups had no path to even enter the pipeline.

The Growth Story — and Its Achievements

iDEX's growth has been remarkable. In a short span, it has evolved from a bold policy experiment into a dynamic platform connecting innovators directly with the Indian Armed Forces.

Scale

By March 2026, the iDEX programme had engaged 676 startups, MSMEs and individual innovators, with 551 design-and-development contracts signed, up from 619 startups and 430 contracts in February 2025. Over 650 iDEX winners have emerged from the challenges. The programme has awarded contracts worth around $344 million (₹3,000 crore), reaffirming the government's commitment to strengthening indigenous capabilities.

Technology Categories

The 650 awarded contracts span over 50 cutting-edge technology categories — ranging from unmanned aerial and ground systems, AI-enabled surveillance, and encryption-based communication networks to advanced propulsion and miniaturised guidance systems. This is not narrow. It is a deliberate attempt to fill capability gaps across the full spectrum of modern warfare — from the tactical edge to strategic systems.

Success Stories

Several iDEX winners have become industry reference points for what the programme makes possible.

Sagar Defence, an iDEX winner, won the "Accelerating the Autonomous Robotics Revolution" challenge at the Dubai Airshow 2025 with its "Genesis" concept — an AI-powered "boat-in-a-box" module that can make existing vessels autonomous or remotely operable. This was not a lab demonstration. It was a competitive international challenge, and an Indian startup won it.

QNu Labs achieved record distances in Quantum Key Distribution, outperforming global competitors in a technology domain that will define secure communications for decades.

3rdiTech signed a Cooperative Research and Development Agreement (CRADA) with the U.S. Space Force and Air Force Research Lab — a recognition that an Indian defence startup's technology was advanced enough to interest the world's most sophisticated military R&D ecosystem.

New Space and Research Technologies (NRT) also signed a CRADA and is in further discussions with the U.S., while Astrome, in wireless broadband, has already entered the U.S. market independently.

Procurement

The Ministry of Defence reports that 58 iDEX-developed prototypes have received procurement clearance and 45 procurement contracts worth about ₹2,326 crore have been signed. These are the numbers that matter most. A prototype is a proof of capability. A procurement contract is a proof of trust.

What iDEX Gets Right

Despite the inherent challenges of defence innovation — long cycles, high capital requirements, sensitive technology, risk-averse procurement — iDEX has several structural strengths.

1. Broadening the Innovation Pool

iDEX has democratised defence innovation. Before iDEX, only large players could afford to participate — the cost of entry was measured in decades of relationship-building and billions of rupees in capital. iDEX opened the doors to startups, small enterprises, and even individual innovators. The programme is now engaged with over 350 startups and 100 MSMEs, building a distributed innovation network that brings fresh perspectives and agility to problems previously tackled by a small number of large, often bureaucratic, organisations.

2. Rapid Development Timelines

Military technology is notoriously slow to develop — a major weapons system can take a decade from concept to deployment. iDEX has shown that complex challenges can be solved much faster. Many challenges are being solved within 12 to 18 months with government support of under ₹15 million (~$160K). This speed is critical in a world where the battlefield is being redefined by rapidly evolving technologies — drones, AI, electronic warfare — and where a capability gap measured in months can be decisive.

3. A Pipeline of Cutting-Edge Technology

iDEX is not about incremental improvements to existing systems. It is driving deep-tech innovation in AI, quantum computing, drones, autonomous systems, and more. This is helping India move from being a follower — licensing foreign technology and assembling it locally — to becoming a creator and standard-setter in defence technology. The CRADAs with the U.S. Space Force are not symbolic. They are evidence that Indian defence innovation has crossed a quality threshold.

4. Spin-off Benefits

The innovations developed through iDEX are generating spin-off benefits in civilian technology sectors, including disaster management, space applications, cyber security, and energy. A drone developed for border surveillance can be adapted for disaster response. An AI system built for threat detection can be repurposed for infrastructure monitoring. Defence R&D has historically been the source of some of the most consequential civilian technologies — the internet, GPS, jet engines. iDEX creates a structured mechanism for that spillover.

5. Attracting Private Investment

The energy and successes of iDEX are attracting private venture capital — a crucial signal that the sector is seen as a viable investment opportunity, not just a government grant programme. Titan Capital, an early-stage venture capital firm that has backed companies like Ola, Urban Company, and Mamaearth, has signed an MoU with iDEX to provide early capital, operational mentorship, and market access to defence-tech entrepreneurs. When VC firms that built consumer internet unicorns start backing defence startups, something structural has shifted.

The Problems Nobody Talks About

iDEX's expansion has not been without structural challenges. Some are growing pains. Others are design flaws that will compound with scale.

The Prototype-to-Production Gap

The most critical challenge is the transition from a successful prototype to a long-term supplier relationship. Winning a development contract is only the first milestone. The real test begins when a system has to perform repeatedly in unpredictable operational environments — extreme temperatures, electronic warfare conditions, rough handling by soldiers in the field.

While official data shows that 58 iDEX-developed prototypes have received procurement clearance and 45 procurement contracts worth about ₹2,326 crore have been signed, the data does not reveal how many companies have gone on to secure repeat orders or long-term supplier relationships with the armed forces. A single procurement contract is survival. Repeat orders are sustainability.

The "Real Test" After the Prototype

Moving from a successful demonstration to operational deployment requires technologies to be validated under real-world conditions, alongside lengthy procurement cycles and consistent production quality at scale. A startup that can build one prototype in a lab may not be able to build a hundred units to military specification, on time, with lifecycle support.

The government has released the draft Defence Acquisition Procedure (DAP) 2026, which proposes measures to streamline procurement and increase private sector participation. But whether these reforms help more startups become long-term defence suppliers — or instead primarily benefit larger, established manufacturers who are better positioned to navigate procurement — remains to be seen. Procurement reform tends to benefit those who already know how procurement works.

The Scale and Sustainability Question

Can these startups scale their manufacturing while maintaining quality, provide lifecycle support for systems that may be deployed for decades, and navigate the complex procurement system of the armed forces? Long-term trust is built through reliability, repeatability, mission relevance, and the ability to support systems after deployment — not through winning a single challenge. The startups that succeed will be those that can transition from being innovation shops to being defence contractors. That transition is organisational, not technological.

Balancing Agility with Security

Defence technology involves sensitive and often classified work. While bringing in startups provides agility and fresh thinking, it also raises concerns about security, intellectual property, and the ability of small firms to handle highly sensitive projects. A startup with five engineers and a co-working space may not have the physical security, personnel vetting, or data handling protocols that classified work requires. The government is working on frameworks to address these concerns, but it remains an unresolved tension between speed and security.

iDEX in the Global Context

India is not the only country looking to tap into startup innovation for national security. The United States has its Defense Innovation Unit (DIU), created in 2015 to accelerate the adoption of commercial technology for military use. The United Kingdom has its Defence and Security Accelerator (DASA). Israel — the closest parallel to what India is attempting — built its defence startup ecosystem over decades, not years.

But India's approach has some distinctive features. Most comparable programmes are either direct procurement from startups (the U.S. model) or small grant programmes with no clear procurement pathway. iDEX is designed to be an end-to-end solution — from funding and mentorship to a codified path for procurement. The Defence Acquisition Procedure 2020 explicitly creates a procurement channel through iDEX. That statutory clarity is unusual.

The international community is taking note. Indian startups are now showcasing their technologies at international platforms such as the Dubai Airshow 2025. The U.S. Space Force and Air Force Research Lab have signed CRADAs with iDEX-backed startups — a recognition that the quality of Indian defence innovation has crossed a threshold that merits the attention of the world's most advanced military R&D establishment. The India-U.S. Comprehensive Global and Strategic Partnership, including initiatives like COMPACT, the US-India Major Defence Partnership, ASIA (Autonomous Systems Industry Alliance), and TRUST, provides a framework for deeper collaboration.

The larger strategic question is whether iDEX can help transform India from the world's largest arms importer into a meaningful defence exporter. The pipeline is there. The talent is there. The procurement pathway is being built. What remains unproven is whether startups can scale from prototypes to production at the volumes, reliability standards, and support commitments that export markets demand.

The Road Ahead

iDEX's developers are focused on several priorities over the next several years.

Scaling and Deepening

The programme is working to engage more startups, scale up existing ones, and deepen the pipeline of innovation. The goal is to move beyond creating one-off prototypes to building a sustainable ecosystem of defence-tech companies that can compete globally. The Defence Procurement Manual (DPM-2025) provides assured orders for five years, extendable by another five — giving innovators much-needed stability and predictability. But assured orders only matter if startups can deliver on them.

The Search for a Defence Unicorn

India has over 100 unicorns today, but none in the defence sector. Raksha Mantri Rajnath Singh called upon iDEX innovators to create India's first Defence Unicorn — a company valued at over a billion dollars, built on defence technology. This is not just a symbolic ambition. A defence unicorn would validate the entire ecosystem: that defence technology can attract venture capital at scale, that procurement contracts can sustain high-growth companies, and that Indian defence innovation can produce commercially viable businesses, not just government-funded projects.

Bridging the Procurement Gap

The government is working on reforms to make the procurement process more friendly for startups. The draft DAP-2026 proposes further measures to streamline procurement and increase private sector participation. But procurement reform is a recurring theme in Indian defence — every few years, a new procedure is announced, and the fundamental challenge remains: the armed forces are risk-averse buyers, and startups are inherently risky suppliers. Bridging that gap requires not just procedural reform but cultural change on both sides.

Global Expansion

Indian defence startups are being encouraged to look at global markets. The India-U.S. partnership offers unmatched opportunities for co-development and co-production. But exporting defence technology is not like exporting software. It requires export control compliance, end-user certification, technology transfer agreements, and navigating the geopolitical sensitivities of selling military capability. The startups that succeed globally will need to be as sophisticated about regulation as they are about technology.

The Verdict

iDEX is neither the complete solution its supporters claim nor the publicity stunt its critics suggest. It is an infrastructure project in the middle of its most difficult phase — past the initial enthusiasm, not yet at critical mass, dealing with real problems that have no easy solutions.

The direction is right. An India where a startup can build the next generation of military technology, where innovation drives national security, and where the country becomes a net exporter of defence equipment would be a more secure, prosperous, and strategically autonomous nation. The architecture — open challenges, milestone-based grants, a codified procurement pathway — is sound. The execution is producing real results: 676 startups, 551 contracts, 45 procurement orders.

But the real test is still ahead. Can iDEX move beyond creating innovative prototypes to building a sustainable ecosystem of defence-tech companies that become long-term suppliers to the armed forces? Can the startups that win DISC challenges become the contractors that supply the military for decades? Can India produce a defence unicorn — not as a vanity metric, but as evidence that the ecosystem is commercially viable?

The old model of defence procurement had decades to entrench itself. iDEX deserves more than a few years to prove its case. But it will only earn that time if the prototype-to-production gap is bridged, if the procurement pathway becomes smoother with each iteration rather than remaining a bottleneck, and if the startups in the programme today become the defence suppliers of tomorrow. The architecture is built. The test now is whether it scales.