Technology Is Reshaping National Security
The sources of military advantage are shifting. Artificial intelligence, autonomous systems, satellite communications, advanced semiconductors, and cyber infrastructure, technologies that now shape how states prepare for and conduct conflict, originate primarily in civilian markets, not defence laboratories. Defence capability is increasingly a function of how well a state integrates its civilian innovation ecosystem, not how much it spends on defence.
This shift has led many countries to rethink the relationship between civilian technology development and national security. Civil-military fusion (CMF) describes one response: the deliberate integration of a country’s civilian scientific, industrial, and technological capacity with its military organisations. For India, the challenge is not technological capability. It is institutional integration. CMF is ultimately a governance problem.
Understanding Civil-Military Fusion
Civil-military fusion is sometimes misread as a narrow industrial policy instrument, a mechanism for directing defence contracts to private firms. The concept is broader. It refers to the integration of an entire national innovation system with defence requirements such as research institutions, universities, commercial technology firms, startups, government laboratories, and the armed forces themselves. The distinction matters: procurement reform alone cannot deliver CMF. A procurement system that opens its doors to startups but cannot absorb what they produce solves half the problem.
Defence analysts argue that civil-military fusion is a measure of national power, meaning that the depth of a country’s civil-military integration reflects, and in turn shapes, its overall strategic capacity. On this reading, CMF is not an input to national power. It is an indicator of whether a country’s innovation capacity is actually mobilised for strategic ends. In this view, fusion is not primarily about procurement or contracting arrangements. It is about whether a country’s broader innovation capacity is accessible and applicable to national security challenges.
The concept is reinforced by the nature of dual-use technologies.
A drone navigation algorithm developed for agricultural mapping, a cybersecurity tool designed for financial institutions, or a satellite communications system built for commercial operators may each have direct defence applications. The boundary between civilian and military innovation has blurred significantly, and this matters for how governments think about research investment, technology access, and institutional design.
Technology as the Core Driver
The current salience of civil-military fusion is not accidental. It is driven by the specific characteristics of contemporary dual-use technologies, which are developed at scale in commercial markets and then adapted for defence purposes. This inverts the traditional model in which defence research generated technologies that later diffused into civilian use.
Several technology domains are particularly consequential:
1) Artificial intelligence is being applied to intelligence analysis, autonomous decision support, targeting systems, logistics, and cyber operations. Most foundational AI development occurs in academic institutions and commercial firms.
2) Autonomous systems and drones have demonstrated significant battlefield utility. Drone technology is largely commercially derived, and defence-grade autonomous systems increasingly rely on commercial components and software platforms.
3) Cyber and digital infrastructure now constitutes a domain of strategic competition. Offensive and defensive cyber capabilities draw heavily on commercial security research.
4) Satellite and space systems support communications, surveillance, navigation, and targeting. The growing role of commercial satellite operators in strategic contexts has been evident in recent conflicts.
5) Semiconductors and advanced electronics underpin virtually all modern military systems. Supply chain vulnerabilities in this domain have become a significant concern for defence planners.
6) Sensing and data platforms integrate data from multiple sources for situational awareness. Advances in this field are driven primarily by commercial investment.
Since development in these domains is concentrated in civilian markets, states that cannot access and integrate civilian technology leadership are at a structural disadvantage in building contemporary military capability.
China’s Civil-Military Fusion Strategy
China provides the most extensively documented attempt to institutionalise civil-military fusion at a national scale. Under its Military-Civil Fusion strategy, formalised and elevated as a national priority from around 2015 onwards, Beijing has pursued the systematic alignment of civilian research and development with military modernisation requirements.
Key features of China’s approach include the integration of private technology firms and universities into defence research programs, state-directed investment in strategic technology domains including artificial intelligence and space systems, regulatory requirements that give the state access to civilian technology assets, and the creation of institutions designed to coordinate across the civilian and military research base.
Analysts in Western governments and strategic institutions have characterised this as a large-scale effort to eliminate what China’s leadership described as a fragmented relationship between its civil and military innovation systems. The results are contested and assessments vary, but there is broad agreement that China has succeeded in raising the institutional priority of civil-military technology integration.
China’s approach is not directly replicable by democratic states given the centralised mechanisms it relies upon. But two things are worth noting for the comparative argument. First, CMF reflects durable strategic logic that predates Xi Jinping. Therefore, it is not a personal agenda but a structural response to the same technology shift that affects every major power. Second, even China’s own defence technology administration has documented serious implementation gaps such as insufficient coordination, sharing, and institutional transformation. The lesson is not that CMF is all-powerful. It is that the strategic direction is right and the institutional execution is hard, for everyone.
For India, the China case suggests two things.
First, the strategic rationale for CMF does not require endorsing authoritarian methods. The underlying logic, aligning national innovation capacity with security needs, is universal. Second, the fact that China struggles with institutional implementation despite state directive power is instructive: if coordination fails even when mandated from the top, the barriers India faces are not uniquely Indian. They are the normal friction of building new institutional relationships across actors with different interests. The question is whether India can design incentive structures strong enough to overcome that friction without coercion.
The United States: When Commercial AI Meets Classified Networks
If China illustrates state-led fusion by directive, the United States illustrates its market-driven counterpart, and the governance tensions it generates. The integration of frontier AI companies into the US defence establishment over the past several years offers a concrete case study in what civil-military technology collaboration looks like in practice, and where it becomes contested.
Palantir Technologies has become the most visible intermediary between Silicon Valley and US national security. In May 2024, Palantir was awarded an initial contract worth up to $480 million to develop the Maven Smart System, the US Army’s AI-powered intelligence and targeting platform. By May 2025, the Pentagon had raised the ceiling of that contract to approximately $1.3 billion through 2029. Maven’s user base expanded from hundreds to thousands of personnel across five combatant commands.
Alongside Palantir, in July 2025 the Pentagon’s Chief Digital and Artificial Intelligence Office awarded contracts of up to $200 million each to Anthropic, Google, OpenAI, and xAI to develop AI agents for defence workflows. The terms required the companies to build capability across several mission areas under the agency’s AI adoption program.
The subsequent months exposed a core tension in this model. Anthropic, whose Claude models had been deployed on classified networks through a partnership with Palantir and AWS, sought contractual guarantees that its AI would not be used for fully autonomous weapons or mass domestic surveillance. When revised contract language from the Pentagon failed to provide those assurances, Anthropic walked away from the agreement in early 2026. The episode revealed that civil-military fusion in practice is not merely a technical or procurement question. It is a governance question about who sets the terms of use for powerful dual-use systems, and what institutional protections are available to enforce those terms.
The deeper issue is not contractual but institutional: the US defence establishment does not have an innovation problem, it has an innovation adoption problem. Generating advanced AI capabilities and deploying them within operational military systems at speed are separate challenges, and the governance gap between them is where civil-military integration most frequently breaks down.
The US case illustrates several structural features relevant to any country designing civil-military technology collaboration. First, commercial AI firms are now operating on classified government networks at scale, an integration that was largely notional a decade ago. Second, the speed and capability of commercially developed systems have outpaced the governance frameworks originally designed for state-built defence technology. Third, the intermediary role played by firms like Palantir which translate between commercial technology standards and classified infrastructure requirements, absorb procurement and compliance costs, and carry operational risk that pure technology firms will not, has become a distinct function.
India has no equivalent. DRDO performs some of this translation function but with a different institutional logic: its incentives orient it toward long-term research, not rapid deployment of commercially derived capability. The Palantir model suggests that what India may need is a category of institution that does not yet exist in its defence ecosystem: a technology integrator that sits between civilian innovation and military deployment, absorbs compliance and security costs, and operates on commercial timelines rather than procurement ones. The design question matters less than recognising that the translation function is a distinct institutional requirement, not something that will emerge automatically from procurement reform alone. Fourth, and most fundamentally, the conditions under which civilian technology firms participate in national security programs are negotiated, contested, and consequential. Democratic states cannot simply mandate participation. They must design frameworks that make collaboration viable and legitimate.
For India, the US experience offers a different lesson than China’s. The question is not whether to build a directive state apparatus for civil-military fusion, but whether to develop the institutional and governance architecture within which a commercial technology sector can engage with national security requirements on terms that are transparent, workable, and durable.
Why This Matters for India
The China and US cases together establish two things that matter for understanding India’s position. First, the direction of strategic logic is the same everywhere: civilian technology ecosystems are now the primary source of militarily relevant capability, and states that cannot integrate them are at a structural disadvantage. Second, the mechanisms through which integration happens are not universal. They depend on institutional design, incentive structures, and political economy. China’s approach relies on state direction; the US relies on market contracting and governance negotiation. India must design its own pathway, with its own institutional starting point. India’s position in this landscape is characterised by a genuine structural gap. On one hand, the country has developed significant technology strengths: a large and internationally recognised software and digital services sector, an expanding startup ecosystem, substantial talent in engineering and computer science, growing digital infrastructure, and ambitions in space and semiconductor manufacturing.
On the other hand, India’s defence establishment has historically operated in relative isolation from this civilian innovation capacity. Defence research has been concentrated in the Defence Research and Development Organisation (DRDO), procurement has been dominated by public sector undertakings and foreign vendors, and entry barriers for private firms and startups have remained high despite recent reform efforts. This is not primarily a resource gap or a capability gap. India’s engineers build world-class software; its startups have demonstrated genuine defence-relevant innovation. This is an institutional integration gap: civilian technology capacity is not effectively accessible to defence organisations, nor are defence needs visible to civilian innovators.
The gap persists partly because the current system distributes benefits to specific actors who have limited incentive to change it. Defence public sector undertakings (DPSUs) and DRDO dominate procurement relationships and research budgets that would be exposed to competition under a more open innovation system. Procurement bureaucracies derive institutional authority from controlling access to defence contracts. And private industry, until recently, found it rational to pursue offset arrangements and joint ventures with foreign OEMs rather than invest in indigenous R&D, because the returns were more predictable. Each of these actors operates rationally within the current system. The integration gap is not primarily a failure of awareness or intent. It is the equilibrium outcome of misaligned incentives across a fragmented institutional landscape.
The consequences are visible in import dependency data. According to SIPRI’s 2024 arms transfers report, India was the world’s second-largest importer of major arms in the period 2020 to 2024, accounting for 8.3 percent of global arms imports. While this represents a decline of 9.3 percent compared to 2015 to 2019, attributed in part to growing domestic production capacity, India has yet to appear among the top 25 global arms exporters.
The decline in imports reflects growing domestic production, but production growth has been concentrated in established public sector units and platform-level manufacturing, not in the technology domains where the next generation of military capability will be decided. The government has taken steps to address this. The 2024-25 defence budget allocated Rs 6.21 lakh crore to defence, with 75 percent of capital procurement reserved for domestic manufacturers. Defence production reached Rs 1.27 lakh crore in 2023-24, a 174 percent increase from 2014-15 levels. The integration of civilian technology, particularly in AI, autonomous systems, and data infrastructure, into operational defence capability remains limited.
The technology domains shaping modern conflict, AI, drones, cyber capabilities, space systems, are precisely those in which India’s civilian sector has growing competence. Closing the gap between that competence and defence application is not simply a matter of industrial policy. It requires rethinking the institutional architecture through which technology development and national security planning interact.
Risks and Governance Challenges
Deeper civil-military technology collaboration introduces governance challenges that must be addressed rather than assumed away.
Intellectual property concerns are significant. Private firms and research institutions may be unwilling to participate in defence programs if they cannot protect their commercial IP or if engagement with defence procurement creates reputational risks in civilian markets. The Anthropic-Pentagon dispute in early 2026 illustrates this directly: a company operating on classified US networks walked away from a $200 million contract specifically because it could not secure contractual guarantees over how its technology would be used. Usage terms, not payment terms, were the sticking point. For India, where trust between civilian technology firms and the defence establishment is less developed, the IP and governance risk is higher, not lower.
Export control regimes and technology transfer restrictions, including India’s obligations under international agreements and the regulatory frameworks of partner countries, limit the scope of collaboration in certain domains. These constraints require careful navigation.
Technology leakage risks are real. Closer integration between civilian technology ecosystems and defence systems expands the surface area through which sensitive technologies could be accessed by adversaries.
Regulatory fragmentation across ministries and agencies creates coordination problems that can frustrate even well-intentioned collaboration efforts. India’s defence innovation environment involves multiple ministries, several categories of research institutions, and overlapping procurement frameworks, each with distinct processes and incentives.
Procurement bottlenecks remain a persistent structural obstacle. Entry conditions for startups and private firms in defence procurement are improving but remain demanding, and payment and contracting timelines can be prohibitive for smaller organisations.
These are not novel governance problems. Financial services regulation, data protection law, and export control regimes have all developed frameworks for managing analogous tensions between commercial openness and national interest. India’s civil-military governance challenge is to adapt those models to a defence context, not to invent new ones from scratch.
Institutional Alignment in India
Effective civil-military fusion requires institutional coordination across actors that currently operate with limited connectivity. The relevant institutions include the Ministry of Defence, the armed forces, the Defence Research and Development Organisation, private defence manufacturers, technology startups, universities and research institutions, the Ministry of Electronics and Information Technology, the Department for Promotion of Industry and Internal Trade, and innovation support agencies including iDEX and the Anusandhan National Research Foundation.
The coordination problem is structural. Each of these actors operates within distinct incentive environments. DRDO’s incentives are oriented toward long-term research development. Armed forces procurement priorities are shaped by immediate capability requirements. Private firms respond to market signals and investment timelines. Startups require rapid contracting and clear intellectual property frameworks. Universities prioritise research publication and academic recognition.
These incentive structures are not inherently incompatible, but some are actively in tension. DRDO risks losing its monopoly on defence R&D if startups and private firms gain direct access to armed forces requirements. DPSUs risk losing captive procurement relationships if competitive entry is genuinely opened. Bureaucratic intermediaries risk losing authority over access if procurement pathways are simplified. Bridging mechanisms work when they reduce the cost of integration for everyone; they fail when they ignore the cost that integration imposes on incumbents.
Effective bridging mechanisms are therefore those that create new value for incumbents, not just new entrants. Shared technology roadmaps give defence organisations advance visibility into what civilian firms are developing, reducing procurement risk. Contracting frameworks adapted for startups can be designed to complement rather than replace DRDO’s role, for instance by focusing on technology domains DRDO does not currently serve. Governance structures that consolidate coordination authority in a single cross-ministry body reduce bureaucratic fragmentation without threatening any individual ministry’s mandate. The design challenge is not technical. It is political.
Implementation Pathways
Several institutional mechanisms could improve civil-military technology integration in India without requiring wholesale system redesign.
Effective implementation requires sequencing. The most urgent priority is not adding new programs but improving absorption within existing ones. The supply side of defence innovation, startups, researchers, and civilian technology firms, has grown faster than the demand side (defence organisations’ capacity to evaluate, procure, and deploy what the supply side produces). The reforms that matter most in the near term are therefore those that work on the demand side: building procurement expertise within the armed forces, shortening evaluation timelines, and creating institutional accountability for technology absorption. New programs should follow from that foundation, not precede it.
The iDEX program, launched in 2018, represents India’s most substantive experiment in opening defence innovation to the private sector. By December 2024, iDEX had generated procurement orders worth Rs 1,000 crore from companies that entered through its challenge-based grant framework. Its ADITI scheme, introduced in 2024, funds projects at higher technology readiness levels with grants of up to Rs 25 crore. More than 2,000 defence startups and 300 space startups are now active in this ecosystem.
The program has demonstrated that Indian startups can deliver defence-relevant innovation at speed. iDEX was designed specifically to address what Ajay Kumar, its architect, calls the valley of death: the gap between proof-of-concept innovation and operational procurement. Earlier Indian defence policy assumed innovation would come from DRDO or established DPSUs. iDEX inverted that logic by publishing operational problem statements directly to the startup ecosystem. Several iDEX winners have produced solutions at technology readiness levels and cost points that compare favourably with international alternatives. Yet structural bottlenecks persist. The transition from prototype to operational procurement remains slow, and grant ceiling sizes, while increasing, remain modest relative to the capital requirements of scaling defence technology products. The core problem is not funding, it is absorption. The armed forces have limited institutional capacity to evaluate, integrate, and operationally deploy technologies developed outside the DRDO system.
Dual-use technology programs that define research themes jointly between defence and civilian agencies could create shared investment priorities, but only if the Ministry of Defence and MeitY establish a joint working mechanism with decision-making authority, not just an advisory committee. Defence technology sandboxes, analogous to regulatory sandboxes in financial services, could lower entry barriers for startups seeking to demonstrate capability without full procurement compliance. This requires the armed forces to commit evaluation resources and timelines upfront, not just open the door. Joint research programs between universities and defence laboratories would reduce the institutional distance between academic research and defence application but require IP ownership frameworks to be agreed before programs begin, not negotiated case by case. In each instance, the reform that matters is not designing the program. It is specifying who is accountable for making it work.
The US-India Defence Acceleration Ecosystem, known as INDUS-X and launched in 2023, provides a channel for joint challenges between Indian and US defence startups. Engagement with this framework could help Indian firms benchmark against international standards while accessing larger procurement markets.
The single most consequential institutional gap in India’s civil-military innovation ecosystem is the absence of a technology translation function. The US experience shows that this function (bridging civilian technology standards and military deployment requirements, absorbing security compliance costs, operating on commercial timelines) does not emerge automatically from procurement reform or startup grant programs. It requires a dedicated institutional vehicle.
India could develop this in at least three ways: through a mandated and ring-fenced technology integration unit within an existing body such as iDEX; through a public-private partnership model in which selected private firms are accredited to perform translation and intermediary functions for the armed forces; or through a new Defence Technology Corporation with a specific mandate to commercialise and deploy dual-use civilian technology within military systems. Each option involves different trade-offs on speed, accountability, and cost. What matters is that the function is recognised, assigned, and resourced, rather than assumed to happen through market forces or procurement reform alone.
Priority Technology Domains
Given India’s existing civilian technology strengths and documented defence capability gaps, several domains merit prioritised attention:
1) Drones and autonomous systems, where India has domestic commercial capability and significant procurement needs, and where the gap between civilian technology and defence application is relatively small.
2) Artificial intelligence applied to logistics, intelligence analysis, and decision support, areas where India’s software engineering base could contribute meaningfully if institutional channels exist.
3) Cyber defence capabilities, where civilian cybersecurity expertise developed in commercial contexts can be adapted for national security purposes.
4) Satellite and space technologies, where the growth of commercial operators including ISRO’s commercial arm and private entrants creates opportunities to integrate national security requirements into a growing ecosystem.
5) Communications and networking systems, where India’s digital infrastructure investment creates a foundation for defence-relevant capability.
6) Semiconductor supply chains, where India’s ambitions to develop domestic manufacturing capacity intersect directly with the input requirements of modern defence systems.
Prioritisation across these domains should be guided by explicit assessments of where India’s civilian technology base is strongest and where defence capability gaps are most significant.
Conclusion
The central finding of this analysis is not that India needs more defence innovation. It is that India needs the institutional plumbing through which innovation already being generated in its civilian economy can reach its defence organisations at operational speed. That plumbing does not yet exist at the required scale. Building it involves at minimum three things: a governance framework that gives civilian technology firms confidence to participate in defence programs on commercially viable terms; a procurement and evaluation system within the armed forces that can absorb and deploy civilian-derived technology without defaulting to DRDO or imported systems; and an intermediary function (whether institutional or commercial) that performs the translation between civilian and military requirements that no existing actor currently does.
India has the technology assets that could support a more integrated civil-military innovation system. The question is whether the institutional architecture, the coordination mechanisms, the procurement frameworks, and the governance structures required to activate that capacity will be built with sufficient urgency and coherence.
The argument for doing so is not ideological. It is strategic.
The technologies reshaping the character of conflict are largely civilian in origin, and a defence establishment that cannot access them at scale will face compounding capability constraints over time. The experiences of the United States and China, different as they are in method and structure, both point to the same underlying conclusion: the gap between a nation’s technology capacity and its national security capability is not a given. It is a policy choice. The specific choice India faces is institutional: whether to build the coordination mechanisms, procurement frameworks, and governance structures that make civil-military integration possible or to continue treating defence innovation and civilian technology development as adjacent but separate systems. The cost of the second option will compound over time.
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