In a landmark policy initiative aimed at strengthening India’s research and innovation ecosystem, the Union Cabinet has approved the Research, Development and Innovation (RDI) scheme with a total outlay of ₹99,771 crore (US$ 11.65 billion). This ambitious plan marks a pivotal move toward bridging India’s R&D investment gap, especially in deep-tech and long-gestation scientific ventures, and aligns with India’s broader goal of becoming a global innovation powerhouse.

Announced in the July 2024 Budget, the RDI scheme is designed to stimulate blended finance, unlock interest-free long-term capital, and commercialise indigenous innovations, especially those developed within Indian labs and institutions.

India’s R&D Investment Gap

At present, India allocates just 0.64% of its GDP to Research and Development (R&D)—a figure that lags significantly behind nations such as the United States (US), Japan, and China, all of which invest between 2% to 5% of their GDP into the sector. This disparity has long constrained India's scientific output and global competitiveness in frontier technologies such as AI, quantum computing, biotech, semiconductors, and advanced manufacturing.

The RDI scheme, with its ₹99,771 crore corpus, seeks to narrow this gap by enhancing public-private partnerships, fostering deep-tech innovation, and supporting infrastructure critical for early-stage R&D work.

Institutional Backbone: ANRF and Blended Finance

The operationalisation of the scheme will be managed by the Anusandhan National Research Foundation (ANRF), which will be chaired by Prime Minister Narendra Modi. The government will provide interest-free loans over a 50-year period to ANRF, which will, in turn, allocate concessional capital to second-tier fund managers, such as:

• Alternative Investment Funds (AIFs)

• Non-Banking Financial Companies (NBFCs)

• Development Finance Institutions (DFIs)

These entities will deploy funds to startups, research labs, academic institutions, and innovation-led enterprises, especially those working on high-risk, high-reward technologies that traditional capital markets often avoid.

Industry Reactions and Support

The announcement has been widely praised by industry leaders and venture capitalists. Siddarth Pai, Founding Partner of 3one4 Capital, called it a “watershed moment” for India’s innovation economy, especially because of its blended finance approach, which mixes grant, debt and equity models to support long-gestation R&D projects.

Anjali Bansal, Founder of Avaana Capital, emphasized how this scheme could attract global Indian scientific talent back home by offering funding security, infrastructure access, and lab clearances via single-window systems. She also highlighted the potential of the scheme to reduce India’s brain drain and foster a globally competitive innovation ecosystem.

Bridging the Technology Readiness Gap

A key challenge in Indian R&D has been the Technology Readiness Level (TRL) gap. Indian institutions often develop solutions up to TRL-4 (prototype phase), but private players are reluctant to fund projects until they reach TRL-7 or TRL-9 (market-ready stage). This valley of death has been a major bottleneck in taking academic innovations to the market.

Ajai Chowdhry, Founder of HCL and Chairman of the EPIC Foundation, stated that the RDI scheme directly addresses this problem. The concessional funding can help scale innovations from lab to market, promoting productisation, patent creation, and global licensing opportunities.

Need for Private Sector Inclusion in ANRF

Despite the enthusiasm, many stakeholders have urged the government to ensure industry representation in ANRF’s governing board. Currently, the board is expected to include government bureaucrats and academic experts, but there is growing demand to add venture capitalists, private sector R&D leaders, and global innovation experts to ensure practical, market-aligned governance.

Industry experts argue that for a scheme of this scale and ambition to succeed, public-private collaboration must be embedded into its DNA—not just in implementation but in strategic decision-making.

What the RDI Scheme Will Enable

1. Boost deep-tech innovation by supporting high-risk technologies in fields such as semiconductors, AI, quantum, green energy, and space tech.

2. Offer financial incentives and infrastructure support for long-gestation research projects typically underserved by traditional investors.

3. Support startups, academia, and national labs to work in tandem, moving projects from TRL-4 to TRL-9.

4. Create dedicated pipelines of concessional loans for commercialisation and scaling of indigenous technology.

5. Provide simplified lab approval and regulatory pathways, especially via single-window clearance mechanisms.

Awaiting Implementation Clarity

While the scheme’s vision and financial size are unprecedented, stakeholders are now seeking clarity on key elements such as:

• Disbursement timeline of loans to fund managers and startups

• Selection criteria for eligible projects

• Monitoring mechanisms to track outcomes and ROI

• Role of states and state-level innovation councils

• Integration with existing R&D missions such as the PLI schemes, Startup India, and Digital India

Once these frameworks are defined, India’s R&D ecosystem could witness a tectonic shift—from a fragmented, grant-based system to a cohesive, investment-driven innovation economy.

Conclusion: A Giant Leap for India’s Innovation Ambitions

The ₹99,771 crore RDI scheme is one of the most significant interventions in India’s post-liberalisation science and innovation landscape. By adopting a blended finance model, focusing on deep-tech, and enabling collaboration between public and private sectors, the scheme has the potential to elevate India’s R&D investment from under 1% of GDP to globally competitive levels.

If executed with transparency, speed, and stakeholder participation, the scheme could turn India into a global destination for innovation, offering high-quality jobs, world-class patents, and cutting-edge technologies that fuel self-reliance and global influence in the decades ahead.

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