Cabinet approves Research Development and Innovation (RDI) scheme

In a transformative step to bolster India’s research and innovation ecosystem, the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Research Development and Innovation (RDI) Scheme with a corpus of Rs. One lakh Crore.

Recognizing the critical role that the private sector plays in driving innovation and commercializing research the RDI Scheme aims to provide long-term financing or refinancing with long tenors at low or nil interest rates to spur private sector investment in RDI. 

The scheme has been designed to overcome the constraints and challenges in funding of private sector, and seeks to provide growth and risk capital to sunrise and strategic sectors to facilitate innovation, promote adoption of technology and enhance competitiveness. 

Key objectives of the Scheme are as follows:

a) Encourage the private sector to scale up research, development, and innovation (RDI) in sunrise domains and in other sectors relevant for economic security, strategic purpose, and self-reliance;

b) Finance transformative projects at higher levels of Technology Readiness Levels (TRL);

c) Support acquisition of technologies which are critical or of high strategic importance;

d) Facilitate setting up of a Deep-Tech Fund of Funds.

The Governing Board of Anusandhan National Research Foundation (ANRF), chaired by the Prime Minister, will provide overarching strategic direction to the RDI Scheme. The Executive Council (EC) of ANRF will approve the Scheme’s guidelines, and recommend 2nd level fund managers and scope and type of projects in sunrise sectors. 

An Empowered Group of Secretaries (EGoS) led by the Cabinet Secretary, will be responsible for approving scheme changes, sectors and types of projects as well as second-level fund managers besides reviewing the performance of the Scheme. The Department of Science and Technology (DST) will serve as the nodal department for implementation of RDI Scheme. 

The RDI Scheme will have a two-tiered funding mechanism. At the first level, there will be a Special Purpose Fund (SPF) established within the ANRF, which will act as the custodian of funds. From the SPF funds shall be allocated to a variety of 2nd level fund managers. This will be mainly in the form of long-term concessional loans. 

The funding to R&D projects by the 2nd level fund managers would normally be in the form of long-term loan at low or nil interest rates. Financing in the form of equity may also be done, especially in case of startups. Contribution to Deep-Tech Fund of Funds (FoF) or any other FoF meant for RDI may also be considered.

By addressing the critical need of private sector for long-term, affordable financing, the RDI Scheme fosters self-reliance and global competitiveness, thereby facilitating a conducive innovation ecosystem for the country as it marches towards Viksit Bharat at 2047.

Ashok Chandak, President, IESA and SEMI India, stated: The Cabinet’s approval of the Research Development and Innovation (RDI) Scheme is a landmark step in India’s journey toward becoming a global innovation hub.

“By unlocking ₹1 lakh crore of long-term capital for sunrise and strategic sectors, this initiative will catalyze private-sector-led innovation in areas critical to India’s economic and technological sovereignty — including semiconductors, deep-tech, and electronics. IESA strongly supports this vision and will actively work to mobilize its member base and ecosystem partners to align with the RDI goals."

He further stated that IESA has started to work with ANRF, DST and MeitY on R&D initiative and will contribute by:

* Implementing identified high-impact R&D opportunities in semiconductors, electronics systems, and embedded technologies;
* Facilitating collaboration between startups, academia, and industry to accelerate technology readiness;
* Industry Sponsorships and funding for the high impact R&D projects.
* Enabling the creation of robust pipelines for product commercialization and deep-tech venture growth.

The RDI scheme has the potential to transform India’s innovation landscape — and IESA is committed to being a strategic enabler in this journey.

Dr. Ajai Chowdhry, Founder HCL , Chairman EPIC Foundation, stated: "I warmly welcome the Union Cabinet's approval of the Research Development and Innovation (RDI) Scheme with a substantial outlay of ₹1 lakh crore, a milestone I've eagerly anticipated for the past 2-3 years. This landmark decision will profoundly impact India's research and innovation landscape. 

"Under the Honorable Prime Minister's visionary leadership, the government has consistently demonstrated its commitment to progress in India’s R&D investment. The announcement of a ₹1 lakh crore R&D fund by the Government last year has now taken shape, marking a significant step forward for India's scientific and technological advancement.

"India's R&D investment has long been a concern, with the country allocating only about 0.64% of its GDP, significantly lower than 2-5% invested by nations like the US, Japan, and China. The private sector's contribution has been particularly limited. This was recognized by some of us and the government and recognizing this gap, the government's approval of the RDI scheme is a landmark decision, where the whole idea seems to be to encourage the private sector to pick up strategic areas and sunrise sectors and create products for both India and the global market.

"This fund will also enable translational research by the private sector. Typically under ANRF, technical, education / research institutions will take upto TRL (Technology Readiness Level 4). Private sector (both Corporate and Start-ups) can then take it for translational research to TRL-9 for India and the world. 

"Covid-19 catapulted us to the top league of connected nations. We made the right choices, and the world watched us do that. Recently, Operation Sindoor has taught us another valuable lesson: we need belief in our own capabilities, invest in secure and indigenous infrastructure, become a product nation, and lead with conviction, not dependency. 

"The newly approved R&D fund will play a pivotal role in realizing this vision, enabling India to develop cutting-edge products across various sectors and assert its position as a Product Nation in different areas.

"With the Honourable Prime Minister at the helm and an empowered group of secretaries led by the Cabinet Secretary, we can expect long-term benefits from this fund. Housing the RDI Scheme in the Department of Science and Technology (DST) is a fitting decision, given its focus on R&D. This initiative will be a crucial step towards achieving technology sovereignty and realizing the vision of Viksit Bharat by 2047- something for us to look forward to."