Why India must rewire its innovation system before 2026 in defence sector
AI is not another IT upgrade.
It is a sovereignty-level technology that demands leadership reset, faster R&D cycles, defence-led co-creation, and a new partnership between government, PSUs, and private industry.
India is currently a nation of mismatched gears.
We have the world’s youngest and one of the most tech-savvy populations.
Yet our most critical decision-making levers, the ones controlling our governance, industry, defence R&D, and public technology procurement, are in the hands of a leadership class that thinks AI is a buzzword rather than a total structural reset.
This is like a legacy-era engineer having the most modern technology tools; he won’t know what to do with them.
As we enter 2026, we must recognize that AI is a once-in-a-century geopolitical equalizer.
We missed the Industrial Revolution; we utilized the IT revolution as a back-office vendor.
If we miss the AI age by even a few months, we won’t just lose the first-mover advantage and growth; we could lose our very sovereignty.
To win this race, India must declare 2026 “the AI Reset Opportunity Year”, to start with.
This involves starting with a hard-nosed overhaul of leadership, accompanied by fast-track regulatory testing, emergency reform of technology procurement rules, and national access to compute infrastructure and sovereign datasets for public research institutions.
The benefits: A high-velocity national system
The benefits of an AI-prioritised India are not incremental; they are transformative.
In the national interest, we must prioritize 3 screaming advantages:
1. Fast-tracking R&D 10X:
Research and product development organizations like CSIR, DRDO, and HAL have been bogged down by decades-long cycles. We need the world’s most advanced defence systems today, not in 2045, by which time the technology would have moved ahead by generations. By integrating AI into design and processes, and modifying research methodologies appropriately, we can collapse research and product development cycles by up to 90% in many workflows, while improving outcomes and drastically cutting costs, and moving lab prototypes to battlefield-ready or market-ready deployment within months, not decades.
This reset must also break the artificial wall between government labs and private industry.
CSIR, DRDO and PSUs should move from closed-door development to co-creation models where capable private firms participate directly in design, prototyping, testing and manufacturing.
Safeguards are necessary, but they must not be so restrictive that they kill speed and innovation.
Sure enough, private partners should be held to at least the same accountability standards as PSUs, and evaluated strictly on delivery timelines, performance and cost efficiency.
Most critically, the end customer, especially the Indian defence services, must be embedded into the R&D and product development cycle itself, not brought in only at the trial stage, as rightly pointed out by several defence veterans.
Continuous user feedback during design and manufacturing will prevent mismatches between laboratory success and battlefield reality.
This must be coupled with clearly defined responsibility boundaries to prevent decision paralysis and overlapping authority.
2. Post-bubble industry productivity and sovereignty:
Unlike China, India’s open society is vulnerable to intellectual theft via foreign AI platforms. A strategic reset involves building indigenous AI research toolkits and language models. The AI bubble that global investors panic over is not about AI itself but about hardware-centric business models; so, it is not directly applicable to India. The real opportunity lies in AI applications.
We can leapfrog by adopting lean, result-oriented AI that resets business models without losing time.
Government must act as a platform provider by offering sovereign datasets, shared compute access and standardized AI toolkits for Indian startups, MSMEs and PSUs.
3. Governance without middlemen:
AI can automate the mundane layers of bureaucracy that thrive on paper-pushing, costing time and money. A reset governance model will provide faster results by bypassing the babu-dom that has strangled Indian potential for seven decades, especially in defence procurement, compliance approvals and R&D funding disbursal. AI-enabled governance should also enable transparent public-private collaboration platforms where approvals, audits and milestone tracking happen digitally in real time, reducing suspicion-driven delays.
The bottleneck in reforms: Challenging the Seniority Trap
The primary obstacle in reforms is not a lack of ideas or talent; it is the Seniority Trap.
This problem is most treacherous in technical leadership positions that control R&D budgets, defence programs and public-sector innovation.
Our ministries and PSUs are led by individuals relying on legacy CVs.
In an AI-reset world, 30 years of experience without continuous technical updation is a liability.
To overcome this stagnation, every board and ministry must put their leaders to the Hard-Talk Test:
- “Can you describe a core workflow in your chain that you have structurally dismantled and rebuilt using AI, rather than just adding a chatbot?”
If the answer is vague, the leader is obsolete. We can no longer afford the penalty, the time lost to bureaucratic approvals, when AI can collapse the gap with better quality decisions.
The solution: Reset CEOs and hierarchy
We need an offbeat, radical solution to bypass this institutional ineffectiveness.
- Age-agnostic leadership: We must stop asking for CVs and years of service and start asking: “What is your specific AI strategy to double output and cut lead time? What results do you promise in 12 months?” The right leader could be a 30-year-old visionary or a 70-year-old veteran. Age is irrelevant; strategy is everything.
- The power to question the boss: We must create new roles – CEO of Reset, Executive Director of Transformation, etc – empowered to question even Chairpersons and MDs on transformation-related decisions. They must have direct access to customer management and report directly to Boards, cutting through the red tape that kills innovation, with KPIs tied to AI adoption rate, cycle-time compression, prototype-to-deployment speed and automation penetration.
- Results over credentials: Qualifications are secondary. In 2026, the only credential that matters is the proven ability to use AI to shorten R&D cycles and deliver promised results on war-footing timelines.
The clarion call
This is a do-or-die moment.
The countries that reset their leadership in 2026 correctly will have the best chance to be the world powers of 2030.
India’s business elite and PSU giants must rise to the occasion.
Without AI-led R&D sovereignty, military power, economic power and governance autonomy will all become dependent imports.
We must purge the mindsets of the past to secure the future.
The 2026 Reset is our ticket to the top.
Note:
1. Text in Blue points to additional data on the topic.
2. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.
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