The Defence Ministry ‘s Technological Development Fund scheme, which aims to enhance and encourage the participation of MSME (Ministry of Micro, Small and Medium Enterprises) and the startups to decide and develop defence technologies indigenously, has so far supported 41 MSMEs and 20 startups.
Sharing the data in a written reply to a question placed in the Lok Sabha earlier this week, the Minister of State for Defence Ajay Bhatt said that out of the amount allocated, the Rs 64.23 crore was disbursed as the grant in aid to industries for developing defence technologies.
All About TDF
The Technological Development Fund (TDF) scheme has been established to promote self-reliance in defence technology as a part of the Make In India initiative. It is a programme of the MoD (Ministry of Defence) executed by the DRDO to meet the requirements of the Tri-Services, Defence Production and the DRDO.
Launched in 2016 and executed by the Defence Research and Development Organisation (DRDO) under the Make in India programme, the government has allocated 260 crores under the scheme since its inception.
This scheme is aimed at encouraging the participation of the MSME, public and private industries to create an ecosystem for enhancing the cutting-edge technology capability for defence application and it supports the indigenous development of components, products and systems and technologies by the MSMEs and startups.
The main objectives of the Scheme are to upgrade existing systems and products, such as electronic warfare systems and missiles and develop future technologies like Artificial Intelligence (AI) and quantum computing. Import substitution of subsystems and semiconductors along with increasing industry participation, especially MSMEs and startups.
Eligibility Criteria
For eligibility criteria, the industry must be a public limited company, a private limited company, a partnership firm, a limited liability partnership, one person company registered as per applicable Indian laws.
The industry must be an MSME or startup registered in India. It should be owned and controlled by a Resident Indian citizen, and the entity should not have an excess of 49% foreign Investment. Having achieved this, it will not be considered eligible.
Funding Mechanisms
According to the scheme, there are two types of funding mechanisms; the first is that DRDO’s share of the project cost is paid in instalments in the form of reimbursements upon successful achievement of the milestones by a business. Secondly, the advance funding of the project is subject to a maximum of five milestones of the project.
The funding will be covered through the provision of grants-in-aid to the industry. The project cost of up to INR 10 crores will be considered for funding, subject to a maximum of 90 per cent of the total project costs.
Project Duration
The scheme’s project duration is limited to two years, ensuring timely execution and alignment with the defence requirements The time constraint allows for a focused approach towards the development of viable projects that can deliver outcomes and capabilities within a stipulated time frame.
Recent Developments
Recent developments include signing an MoU (Memorandum of Understanding) between the SIDBI (Small Industries Development Bank of India) and SIATI (Society of Indian Aerospace Technologies and Industries).
This significant partnership will facilitate cooperation between SIDBI, the main financial institution for MSMEs, and SIATI, a society representing Indian aerospace technologies and industries.
Through this collaboration, MSMEs in the aerospace and defence sectors can benefit from SIDBI’s financial assistance as well as non-financial support such as mentorship programs and technical guidance.
Way Ahead
To advance the Technology Development Fund scheme, it is crucial to enhance industry awareness and align project timelines with defence requirements. By conducting targeted awareness campaigns and providing clear guidelines on project timelines, the scheme can attract more industry partners and ensure that projects are aligned with defence requirements
