Despite increasing the project cost to Rs 50 crore from the earlier Rs 10 crore limit, the Technology Development Fund, which had proven a remarkable instrument for progressing research, has run into impediments. Most of these impediments stem from a new set of most voluminous requirements. The article identifies the areas that need to be addressed for the fund to make the difference it intended.
Technology Development Fund (TDF) is one of the most successful micro-schemes managed by the Defence Research and Development Organisation (DRDO), but lately, it is facing unexpected headwinds. It’s reliably learned that very few if any, new projects have been sanctioned in the past several months.
Presenting the union budget for 2014-15, Finance Minister Arun Jaitley proposed setting aside an initial sum of Rs 100 crore to set up a TDF to provide resources to public and private sector companies, including small and medium enterprises and academic and scientific institutions. The fund was to promote research in developing cutting-edge technologies that enhance the capability of the armed forces.
It took a couple of years for the fund to materialise after the finance minister’s announcement, but once it got going after the Covid pandemic, there was no stopping its surge as the progenitor of one success story after the other. At least ten such stories are documented, ranging from developing composite material sea water pumps by Pune-based Zeus Numerix to autonomous drones as first responders for search and rescue missions in enclosed and indoor environments by Bengaluru-based New Space Research & Tech Pvt. Ltd.
According to the scheme’s official website, 164 technologies are currently being indigenised, 5399 companies and 2002 experts are involved in the effort, and a total sum of Rs 254 crore has been sanctioned so far as financial support for various projects under the scheme, which envisages funding of projects costing up to Rs 10 crore. Ironically, the scheme started encountering rough weather after the project cost limit was increased to Rs 50 crore.
While the TDF managers, fund beneficiaries, and the industry are best placed to figure out why things have come to such a pass and take corrective action, to an outside observer, the current imbroglio seems to be on account of issues relating to the scheme’s orientation, procedures, and the structural framework within which it operates.
The TDF scheme is currently oriented towards the following focus areas of research and development of technologies or prototypes of products that have the potential to be used by the armed forces:
- Significant up-gradation/improvements/ further developments in the existing products/ process/application/upgrades, in terms of reduced material consumption, improved functioning, improved quality, and reduced energy consumption, resulting in overall cost reduction;
- Technology readiness level up-gradation from TRL3 onwards to the realisation of products as per Services’ requirements;
- Development of futuristic technologies/innovative products which can be useful for defence applications in the future and
- Import substitution of components whose technologies do not exist in the Indian industry.
These focus areas overlap with the orientation of the ‘Make’ procedure, which was adopted by the Ministry of Defence (MoD) in 2005. It is instructive that hardly any Make project – a major project, in any case – has fructified since then. Surprisingly, the research-oriented TDF has been modelled on the production-oriented Make procedure, beginning with the source from which the projects under these two categories are be culled out.
It would probably be a good starting point and more rewarding for DRDO to focus on developing critical technologies that DRDO wanted to obtain via the offset route but which no vendor has transferred to date.
Be that as it may, the Standard Operating Procedure (SOP) for the TDF scheme provides that based on the Long-Term Technology Perspective Plan (LTTPP) and inputs from Services Headquarters (SHQs), Department of Defence Production (DDP), etc., DRDO will identify potential projects to be undertaken under the scheme. In essence, this is also the basis for identifying the projects to be undertaken under the Make procedure.
An outdated LTIPP prepared more than a decade back, which anyway was to be, but has not been, replaced by the Integrated Capability Development Plan, cannot be a good starting point for identification of projects to be undertaken via the TDF scheme and the Make procedure, especially in the absence of precise guiding principles for identification and categorisation of projects under these categories.
It is important because, in one form or another, research and development projects can also be undertaken via other routes, such as iDEX (Innovation for Defence Excellence), the procurement category of Design and Development by DRDO and Defence Public Sector Undertakings, and under the aegis of the Directorates of Indigenisation of each of the three services. The resultant disjointed effort, without any overarching organisation to coordinate the efforts, is not conducive to the rapid indigenisation of military technologies.
Procedurally, the TDF scheme also emulates the Make procedure, with the stages through which Make and TDF projects must pass being similar. Even the criteria for selecting the Development Agency (DA) are similar. It is problematic. While in Make projects, the DA must also have the capacity to productionise the prototype, this is not true of the TDF projects. The selection criteria for TDF projects must be nimbler and simpler, with a focus on the research capabilities of the potential DAs rather than on a wide array of background information about the company, its financials, and the tangible and intangible assets it possesses.
It matters little, for example, whether an aspiring DA is a manufacturer, trader, sole selling or authorised agent, dealer, assembler, processor, re-packer, or service provider, and what is its broad product range under each of these categories. It also seems pointless to seek ‘details of the pollution control certificate’ and ‘ISO certification’. But this is precisely the kind of information required to be given by the companies.
The companies aspiring to undertake projects are also required to provide information regarding the covered and uncovered area of the factory; sanctioned, installed and standby electric power; details of the important facilities, including the make and model of instruments and tools owned by the company; and technical specifications of the equipment proposed to be used in the project.
The frightening list of documents to be submitted includes annual returns, balance sheets, profit and loss accounts, compliance certificates, etc., along with all attachments submitted to the Registrar of Companies for the past five years. The aspiring researchers are also required to furnish the income tax returns (for the past five years), cash flow statements to show cash profit earned, the company’s debt-to-equity ratio, and copies of the memorandum and articles of association. All this to what end?
These are just a few examples of numerous points in respect of which information and documents are required to be furnished. Apart from being dispiriting for research-oriented aspirants, especially the smaller companies and start-ups, which are more likely to give their best in developing new cutting-edge technologies, the virtual information overload contributes to delays in processing the data and scrutinising the documents in the absence of any clarity as to what is to be done with the information and the documents, making the task of selection more onerous.
There are many other provisions in the SOP which warrant reconsideration. For example, the Acceptance of Necessity (AoN) -essentially approval in principle to undertake a project- is valid for one year, within which the Expression of Interest (EoI) must be issued, failing which the AoN has to be revalidated. Apart from begging the question of why the EoI cannot be kept ready when the AoN is taken, the rationale for prescribing a limit for one year for the EoI’s validity is shrouded in mystery.
The SOP further provides that if the academia or research institutions are involved in a project, their work involvement cannot exceed 40% of the total efforts required. Apart from the potentially contentious issue of calculating the work share, the very purpose of this stipulation is unfathomable. The SOP also provides that ‘typically’, the TDF projects shall not exceed a development period of two years. Forget about the bureaucratic wrangling over allowing more time for the completion of a project or foreclosing it; the very purpose of this stipulation is unclear. It should matter little how much time a project takes as long as the technology being developed is relevant to the needs of the armed forces.
Lastly, while the TDF scheme is being managed by a dedicated team of competent scientists at the DRDO HQ, the structures that have been created to oversee the execution of the projects seem unwieldy. To illustrate, the Project Monitoring and Mentoring Group (PMMG), which is responsible for overseeing the projects, consists of representatives of the SHQs, HQ-Integrated Defence Staff, DRDO, DDP, Directorate General of Quality Assurance, Advisor Cost, integrated finance, and other experts, as required.
A disparate group of about 10 part-time officials is too unwieldy to provide real-time guidance and resolve the thorny issues that every developmental project is bound to face, especially in the absence of a clear definition of the role and responsibilities of each member. Of special significance, in this context, is the involvement of a finance representative, not only in the PMMG but also the Technical Committee, which, among other things, is required to Identify technologies to be developed through the TDF scheme, conducting feasibility studies, and classifying the identified technologies as sensitive and nonsensitive.
To sum up, there is a need to consider whether the TDF scheme requires reorientation, procedures need to be simplified by eliminating bureaucratic stranglehold, and PMMGs need to be made wieldier and more empowered to remove the roadblocks as and when they appear during the execution of a project. Development of cutting-edge, disruptive technologies calls for non-bureaucratised ‘disruptive thinking’.