Sanctioned sabotage: How India gains access to U.S. defense innovations

Sailors inspect an F/A-18E Super Hornet on the flight deck of the USS Nimitz during Operation Octave Quartz in the Indian Ocean, Jan. 1, 2021. (U.S. Navy photo by Mass Communication Specialist 3rd Class Elliot Schaudt)

| Published June 11, 2025

‘India remains on the U.S. Trade Representative’s Priority Watch List for chronic intellectual property violations, technology theft and forced localization policies … Yet the U.S. government is now proactively facilitating access’

In June 2025, WND published “Sanctioned sabotage: How India gains access to U.S. defense innovations,” which explores the unfolding INDUS‑X initiative—a collaboration launched in June 2023 by the U.S. Department of Defense and India’s Ministry of Defence under the Biden administration’s Initiative on Critical and Emerging Technology. Promoted as a platform for joint innovation, INDUS‑X has provided U.S. taxpayer funding and institutional resources directly to Indian defense‑related startups—but critics point to a notable imbalance in outcomes.

The Birth of INDUS‑X

• What it is:

  • A joint innovation ecosystem connecting Indian defense startups to U.S. infrastructure: the Defense Innovation Unit (DIU), U.S. Pentagon labs, and taxpayer-funded programs.

  • Designed to foster collaboration under the broader Initiative on Critical and Emerging Technology.

• Early results:

  • In its first year, over $1.2 million in U.S. public funds went to Indian firms such as Pixxel, Zeus Numerix, PierSight, and OceanComm to develop defense‑relevant prototypes.

  • Seven Indian startups received strategic mentorship, access to U.S. test facilities, and connections with American defense contractors.

Success Stories in the Spotlight

• Pixxel:

  • A hyperspectral imaging satellite startup that procured a five‑year contract with the National Reconnaissance Office and a NASA-led Earth observation deal. Bolstered by INDUS‑X engagement, Pixxel secured over $60 million in funding and expanded operations globally.

• Zeus Numerix & PierSight:

  • These startups, among others, gained visibility and support via INDUS‑X pipelines—from accelerated prototyping stages to access to advanced U.S. defense ecosystems.

Asymmetry in Access and Opportunity

• One-way funnel:

  • While Indian firms benefited from U.S. resources, the framework offered no equivalent platform for American startups to integrate into India’s defense innovation landscape or its government-backed accelerators (iDEX, DPEPP, DRDO).

• Export controls and procurement barriers:

  • American companies remain bound by stringent U.S. export controls (e.g., ITAR) and face exclusion from India’s defense procurement and offset pathways. Meanwhile, Indian firms freely develop and export U.S.-aided technologies.

India’s Broader Ambitions

• Policy roots:

  • India’s 2020 DPEPP aims to grow its defense manufacturing to $25 billion, with $5 billion earmarked for exports this year.

  • The “Technology Vision 2047” outlines a strategic push toward global prominence in AI, dual-use tech, and defense manufacturing.

• Historical strategy:

  • Dating back to the 1980s, Indian doctrine has emphasized acquiring civilian technologies with latent military applications.

• Regulatory shifts:

  • The Biden administration’s easing of Missile Technology Control Regime (MTCR) export restrictions in 2025 permits the transfer of long-range missile and space-launch tech to “trusted partners” like India.

The Mechanics of Knowledge Flow

• Institutional integration:

  • INDUS‑X has embedded Indian startups in U.S. innovation architecture—from DARPA-aligned labs to federally funded test sites—without the typical legal guardrails of export-control audits wnd.com+1ussc.edu.au+1.

• Capital and mentorship pipelines:

  • U.S. government offices helped channel venture capital and mentorship directly into Indian defense ventures, through investor roundtables and linkages with elite Indian tech institutions like the IITs.

Emerging Patterns

• One-sided benefit:

  • U.S. taxpayer-funded innovation landscapes are being opened to Indian firms, while U.S. startups face barriers to joining in India’s domestic defense programs.

• Regulatory complexities:

  • No bilateral reciprocity terms, limited export control alignment, and lack of enforcement mechanisms raise questions about future technology use and re-export pathways.

Strategic Context

• Global industrial integration:

  • INDUS‑X is part of wider U.S. efforts to integrate defense supply chains and innovation with Indo‑Pacific allies (e.g., AUKUS, Japan, Australia).

• U.S. industrial challenges:

  • Across all partnerships, U.S. defense systems face criticisms for slow procurement, regulatory complexity, and high costs—factors that have pressured policymakers to seek faster and broader innovation linkages.

Here are the implications of the developments described in the WND article titled “Sanctioned sabotage: How India gains access to U.S. defense innovations”, particularly regarding the INDUS‑X initiative:

1. Asymmetrical Technology Transfer

The structure of INDUS-X enables Indian defense startups to benefit directly from U.S. taxpayer-funded innovation ecosystems—accessing labs, testing facilities, and venture capital—without offering American startups reciprocal access to Indian defense programs. This creates a one-way technology flow that may advantage India’s long-term defense-industrial base at the expense of U.S. innovation exclusivity.

2. Weakening of Export Controls

The U.S. decision to relax Missile Technology Control Regime (MTCR) restrictions for India signals a policy shift away from traditional arms-control frameworks. As Indian firms gain access to dual-use space, AI, and missile-adjacent technologies without reciprocal enforcement mechanisms, the effectiveness of U.S. export control regimes may be diluted, potentially setting a precedent for other bilateral exceptions.

3. Strategic Erosion of U.S. Innovation Edge

India’s longstanding strategy of leveraging foreign civilian tech for defense purposes—now supported by formal U.S. initiatives like INDUS-X—could accelerate India’s military modernization. If the U.S. is not able to retain intellectual property protections or enforce conditions on how technology is used or re-exported, this may undermine America’s competitive edge in emerging defense technologies.

4. Undermining U.S. Defense-Startup Ecosystem

American startups are not afforded the same access to Indian defense markets or innovation frameworks. Without reciprocal openings or joint development guarantees, U.S. firms may lose incentives to innovate, especially if domestic regulatory burdens are higher and global competitors can more easily scale using U.S.-funded breakthroughs.

5. Shift in Defense Partnership Norms

The INDUS-X model reflects a larger trend where defense collaboration becomes more commercialized and less bound by traditional military-to-military protocols. This could weaken oversight, blur lines between public and private sector roles in national security, and complicate alliance cohesion—particularly if key technologies spread without alignment on end-use controls.

6. Increased Strategic Leverage for India

By gaining inside access to Pentagon-affiliated programs while maintaining tight control over its own defense market, India is positioned to maximize technology absorption without sacrificing sovereignty. This could give it greater bargaining power in future negotiations with both the U.S. and other defense partners (e.g., Russia, France, Israel).

Overall Takeaway:

The INDUS-X initiative marks a significant deepening of U.S.-India defense innovation ties—but it reveals a structural imbalance. While Indian startups gain direct access to U.S. taxpayer-funded labs, mentorship, and defense resources, there is no reciprocal path for American firms into India’s closed defense ecosystem. This asymmetry reflects a broader shift in how Washington approaches tech partnerships—prioritizing strategic alignment over regulatory parity—and raises questions about the long-term costs to U.S. innovation leadership, export control integrity, and industrial competitiveness in a rapidly evolving global defense landscape.

SOURCE: WORLD NET DAILY – Sanctioned sabotage: How India gains access to U.S. defense innovations