The Defence Research and Development Organisation (DRDO) is undergoing a significant transformation, marking the first time in its history that reforms are being implemented to address both institutional and national challenges. This is not merely an administrative overhaul but a strategic move to position India as a leader in defence technology. According to government sources, the Prime Minister’s Office (PMO) has mandated that the restructuring be completed by 2026, aiming to convert DRDO into a leaner, more efficient, and powerful hub for research and development.
The reforms come at a critical juncture for India, as the nation seeks to bolster its defence capabilities amid rising geopolitical tensions. The DRDO chief, Samir Kamat, has emphasised that R&D should be viewed as a strategic investment rather than a cost centre. “Learning from failed projects is not a waste but capital,” Kamat argues, highlighting the necessity of embracing risk in the pursuit of innovation. However, the institutional mechanisms in India often force R&D units to justify only successes, which can stifle creativity and risk-taking.
Comparatively, agencies like the U.S. Defense Advanced Research Projects Agency (DARPA) deliberately embrace risk, with only a fraction of their projects succeeding. Yet, the few that do often revolutionise entire domains. This model of risk-tolerant innovation is something DRDO must emulate, but it must also address its own institutional inefficiencies, such as project delays that stretch beyond years.
One of the silent killers of innovation within DRDO is procedural and financial rigidity. Scientists operate under the General Financial Rules (GFR) regime, which imposes stringent procurement, accounting, and audit processes. This often results in delayed budget disbursements and entangled approval processes, hindering dynamic fund allocation. In contrast, more agile R&D organisations globally have flexible funding lines, allowing them to pivot mid-project. Financial autonomy for consolidated labs is crucial, and accountability must follow in equal measure.
The budgetary discussion is another critical aspect of the reforms. DRDO’s budget has grown in recent years, with Rs 26,816 crore allocated for FY 2025–26, including Rs 14,923 crore for capital expenditure. However, only about 5–6% of India’s defence budget goes to R&D, a proportion that has stagnated. Much of this budget is consumed by non-innovative costs such as salaries, administrative overhead, and maintenance, leaving little for deep, forward-looking technology.
Kamat has advocated for increasing the R&D share of the defence budget to 10%, and there is a strong case for raising it even higher, with contributions from both private and public sector industries. China’s military R&D expenditure is more than $50 billion, while Israel spends 6.3% of its GDP on R&D, underscoring the disparity in investment. Rising geopolitical competition, particularly with China, demands that India close the technological gap. Major powers like the U.S. and EU allocate a far larger share of their defence budgets to R&D, highlighting the need for India to prioritise this sector.
The lack of adequate testing infrastructure is another significant handicap for DRDO. While India aspires to develop fifth-generation fighters, long-range missiles, stealth drones, and advanced armour systems, it lacks multiple high-speed wind tunnels, large-scale aerothermal testing rigs, and next-generation proving grounds. This results in prototypes waiting months for test slots or being shipped abroad, undermining the quest for strategic autonomy.
Compensation and talent retention are also critical issues. DRDO’s pay scale for scientists is modest by global standards, leading to a drain of top-tier talent to academia, private industry, or foreign labs. To remain competitive, DRDO must revise its compensation packages, offer performance-based bonuses, grants, and patent incentives, and introduce rotations between DRDO, academia, and industry.
To foster defence innovation, several recommendations have been put forward. These include raising the R&D share of the defence budget to at least 10%, granting greater financial autonomy to DRDO scientists, reforming GFR processes, expanding Technology Development Fund programs, and creating defence R&D chairs in premier institutions. Additionally, a risk-friendly culture must be institutionalised, where failure is recognised as part of the innovation process.
The reforms also call for transparent long-term funding and evaluation, with multi-year funding plans for DRDO labs and major technology lines. Periodic reviews of R&D outcomes should consider not only deliverables but also knowledge generation, patents, spin-offs, and capability creation. The alternative is a hollow defence research ecosystem, perpetually lagging behind global competitors.
If these reforms are successfully implemented, India could transform its defence R&D into a fulcrum of national strength, ensuring that the nation not only keeps pace with global advancements but also leads in critical areas of