In a significant push to accelerate India’s private-sector-led innovation ecosystem, the Union Cabinet on July 2, 2025, approved the Research, Development and Innovation (RDI) Scheme with a massive outlay of ₹1,00,000 crore (approximately US$ 11.68 billion). This landmark initiative aims to bridge the gaps in private sector investment in research and development (R&D) and solidify India’s position as a global innovation powerhouse.

Addressing India’s Innovation Gaps

Despite India’s technological strides in recent years, the private sector’s contribution to total R&D expenditure has remained relatively low compared to global benchmarks. The RDI Scheme directly addresses this imbalance by offering:

• Concessional or zero-interest long-term loans

• Equity-based financial support

• Funding for acquisition of critical and strategic technologies

The goal is to enable innovation at scale across key sectors like artificial intelligence (AI), green and renewable technologies, semiconductors, deep-tech, and emerging strategic technologies.

Two-Tier Funding Architecture

The scheme features a dual-layer financial structure:

1. Special Purpose Fund (SPF): A corpus of ₹1,00,000 crore will be managed by the Anusandhan National Research Foundation (ANRF) under the Department of Science and Technology (DST). The SPF will act as the central financial vehicle for disbursing support.

2. Fund Managers and Deep-Tech Fund of Funds: Selected fund managers will allocate the funds to private-sector R&D initiatives through:

   • Concessional loans

   • Equity participation

   • Dedicated funds such as the Deep-Tech Fund of Funds, which will support startups and companies developing breakthrough technologies.

This design allows public capital to unlock private investment, creating a multiplier effect and fostering a thriving innovation ecosystem.

Strategic Sectors in Focus

The scheme focuses on globally competitive sectors, including but not limited to:

• Artificial Intelligence (AI) and Machine Learning (ML)

• Green Hydrogen and Sustainable Energy

• Deep-Tech and Quantum Computing

• Advanced Materials and Manufacturing

• Space and Aerospace Technologies

• Biotechnology and Genomics

• Cybersecurity and Defence Innovation

The emphasis is on ensuring that India is not merely a consumer of technologies developed abroad, but an originator and global supplier of intellectual property, products, and platforms.

Historical Boost to R&D Budget

The approval of the RDI scheme is backed by an unprecedented increase in public R&D spending. Highlights include:

• DST’s budget has increased from ₹2,777 crore (US$ 324.46 million) in 2014 to ₹28,509 crore (US$ 3.33 billion) in FY26—a tenfold rise.

• Gross R&D expenditure rose from ₹60,196 crore (US$ 7.03 billion) in 2014 to ₹1,27,380 crore (US$ 14.88 billion) in 2025.

• The RDI scheme itself received an initial budgetary allocation of ₹20,000 crore (US$ 2.34 billion) in the Union Budget for FY25.

These figures reflect the government’s intent to shift India from a low-R&D economy to one that is research-driven, innovation-led, and export-competitive.

Empowering Private Sector Innovation

The core mission of the RDI scheme is to incentivise private players to take bold R&D risks, especially in high-capital and high-uncertainty sectors. By removing financial constraints, the government seeks to reduce the gestation time between ideation and commercialization, especially for:

• Startups in deep-tech and AI

• Private R&D labs and innovation centers

• MSMEs with potential for IP creation

• Joint industry-academia research partnerships

Additionally, the scheme supports cross-border technology acquisition to fast-track India’s capabilities in sectors where domestic innovation is in its early stages.

Commercialisation of Research: A Key Driver

One of the scheme’s strategic pillars is to ensure that scientific and academic research translates into marketable innovations. This includes:

• Funding proof-of-concept to product development

• Support for pilot trials and tech deployment

• Connecting research institutions with industry use-cases

By acting as a financial bridge, the RDI scheme removes one of the key barriers that historically hindered India’s innovation journey—lack of late-stage commercialisation support.

RDI and India’s Global Innovation Goals

With this initiative, India strengthens its claim as a future global innovation hub. The RDI scheme aligns with other national missions, including:

• Digital India

• Startup India

• India AI Mission

• Make in India and Atmanirbhar Bharat

• Green Hydrogen and Energy Security Missions

It is also a response to global developments where countries like the U.S., China, and Germany have launched aggressive innovation funding mechanisms. India’s RDI scheme ensures competitive parity in nurturing world-class technologies.

Expected Outcomes of the RDI Scheme

• Doubling of private R&D investment over the next 5–7 years.

• Creation of over 5,000 high-tech startups in deep-tech sectors.

• Substantial rise in patent filings, innovation quality, and international IP collaborations.

• Strengthening India’s share in global technology exports.

• Generation of high-skill jobs in emerging industries.

Stakeholder Collaboration and Governance

The success of the scheme will rely on coordination among public institutions, academia, and industry. The government plans to introduce a robust monitoring framework involving:

• Transparent fund disbursement criteria

• Performance-linked funding tranches

• Periodic review by technical and financial committees

This ensures that funds are utilised effectively, innovations are outcome-driven, and taxpayers' money results in long-term national gains.

Conclusion

The Rs. 1,00,000 crore Research, Development and Innovation (RDI) Scheme is a watershed moment for India's science, technology, and innovation ecosystem. By catalyzing private investment, accelerating tech commercialisation, and fostering cross-sectoral synergies, the government is setting the stage for India’s transformation into a global innovation leader.

As the country prepares for the next decade of economic transformation, this scheme lays the foundation for research-led growth, technology-driven exports, and resilient self-reliance in strategic areas.

The RDI scheme is not just an economic stimulus—it is a strategic leap into India’s knowledge future.

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