MoD’s Technology Development Fund limit raised five-fold to Rs 50 crore per project - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Wednesday 8 June 2022

MoD’s Technology Development Fund limit raised five-fold to Rs 50 crore per project

The BrahMos Aerospace assembly line in Hyderabad, into which numerous MSMEs feed their most innovative products


By Ajai Shukla

Business Standard, 9th June 22


The limit of funding of innovative defence projects under the Technology Development Fund (TDF) has been raised on Wednesday to Rs 50 crore per project, from the present limit of Rs 10 crore. 


The TDF scheme, executed by the Defence Research and Development Organisation (DRDO), supports indigenous development of components, products, systems and technologies by micro, small and medium enterprises (MSMEs) and start-ups.


To facilitate increased funding for innovative TDF products, the Union Budget for 2022-23 has reserved 25 per cent of the defence R&D budget for private industry, start-ups and academia. “The enhanced funding is in line with the budget announcement and it will further boost the vision of ‘Aatmanirbharta’ (self-reliance) in defence,” said the Ministry of Defence (MoD) in a statement.


“The TDF Scheme aims to provide a major fillip to the defence manufacturing sector by encouraging the industry to innovate and develop defence technologies in order to place India on the self-reliance trajectory. The scheme facilitates up to 90 per cent of the total project cost and allows industry to work in consortium with another industry/academia.”


“With the enhanced funding, the industry and start-ups will be able to develop more complex technologies for existing and future weapon systems and platforms. Till date, 56 projects have been sanctioned under TDF scheme,” said the MoD.


“With increases in funding limits, potent systems will get developed and bigger companies will get supported along with MSMEs. This will be a massive win-win for all. A clear procurement path after development will mean industry can boldly invest in capabilities,” says Abhishek Jain of Zeus Numerix, a small firm that has won praise for innovation. 


There are four schemes under which small defence firms can approach the MoD for funding innovative projects: iDEX (Innovation for Defence Excellence); iDEX Prime; the TDF and Make II and Make III projects, the modalities of which are explained in the Defence Acquisition Procedure of 2020 (DAP-2020).


The TDF aims at developing products for the military, but also for other strategic industries such as the Indian Space Research Organisation (ISRO). As with iDEX products, an order to the prime developer benefits all the MSMEs that function in its supply chain.


In the decade between 2009-2019, the TDF was allocated Rs 544 crore. In four of those years, the allocation was zero.


iDEX is a smaller scheme, run by the military, which seeks innovative solutions for specified functional challenges that are encountered on the ground. It has a limit of Rs 1.5 crore.


For example, an MSME called Zeus Numerix was declared winner of the iDEX challenge during the Aero India 2021 air show in Bengaluru last year, for developing simulation software that makes warships near-invisible to radar.


If things go as per plan, Zeus would get funding, typically from iDEX Prime to ease the transition of their innovative product into large-scale manufacturing in large numbers. 


Meanwhile, an MSME irreverently named BigBangBoom Solutions won the iDEX challenge for developing “see-through armour.” This allows 360-degree situational awareness to a tank crew by mounting cameras outside the tank, capturing a 360 degree view, and stitching together the separate images from those cameras into a single image through data fusion.


“The current funding levels under iDEX are insufficient to support cutting-edge innovation. It allows for optimisation of various systems, but not basic fundamental research. For funding projects involving basic research, allocation of Rs 50 crore, which the MoD has just allowed, would be required,” says Praveen Dwarkanath, who runs BigBangBoom.


The government told Parliament on March 25 that it has provided iDEX with budgetary support of Rs 498 crore for the five years from 2021-2026, with the objective of providing financial support to nearly 300 start-ups/MSMEs/individual innovators.

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