Cabinet Approves ₹1 Lakh Crore RDI Scheme to Boost Private Sector Innovation

In a historic move to revolutionize India's research and innovation landscape, the Union Cabinet, under the leadership of Prime Minister Shri Narendra Modi, has approved the Research Development and Innovation (RDI) Scheme with a substantial outlay of ₹1 lakh crore. This forward-thinking initiative is designed to stimulate private sector investment in high-risk, high-return R&D projects and facilitate the emergence of India as a global innovation hub.

The scheme, aligned with India’s broader development vision of Viksit Bharat @2047, will channel long-term, affordable capital into sunrise and strategic sectors, nurturing technological self-reliance, economic security, and national competitiveness.

Why the RDI Scheme Is a Game-Changer

The RDI Scheme is a response to longstanding challenges faced by private enterprises and startups in accessing reliable and patient capital for innovation. By addressing financial risk aversion, high capital costs, and limited early-stage funding, the scheme aims to:

• Empower Indian companies to scale cutting-edge R&D projects.

• Accelerate development and commercialization of indigenous technologies.

• Build innovation ecosystems in strategic, sunrise, and deep-tech sectors.

• Foster partnerships between industry, academia, and government.

This marks a paradigm shift in India’s innovation policy from public-sector driven R&D to a private-sector empowered innovation economy.

Core Objectives of the RDI Scheme

The key pillars of the RDI Scheme include:

1. Scaling RDI in Strategic and Sunrise Sectors Encourage private firms and startups to invest in domains vital for national security, economic leadership, and future technology development such as semiconductors, quantum computing, AI, green hydrogen, space, and defence technologies.

2. Financing High-TRL Projects Extend long-term, concessional funding to transformative R&D projects with higher Technology Readiness Levels (TRLs)—especially those nearing commercialization.

3. Strategic Technology Acquisition Support Indian firms in acquiring critical and strategic technologies that can close technology gaps and reduce dependence on foreign suppliers.

4. Deep-Tech Fund of Funds (FoF) Facilitate the establishment of a Deep-Tech FoF that can seed, co-invest, and de-risk investments in emerging deep-tech enterprises through venture capital intermediaries.

Institutional Architecture: Multi-Layered Governance for Impact

The scheme will be implemented through a robust, multi-tiered governance and execution structure:

• Anusandhan National Research Foundation (ANRF): The apex body chaired by the Prime Minister will guide the strategic orientation of the scheme.

• Executive Council (EC) of ANRF: Responsible for formulating guidelines, evaluating sectors, and recommending 2nd-level fund managers.

• Empowered Group of Secretaries (EGoS): Headed by the Cabinet Secretary, this group will review the scheme’s progress, make strategic adjustments, and approve sectoral priorities and fund managers.

• Department of Science and Technology (DST): Acts as the nodal department, ensuring inter-ministerial coordination and policy integration.

Financial Design: A Two-Tiered Funding Mechanism

To ensure efficient fund flow and accountability, the RDI Scheme will utilize a two-tiered funding structure:

1. Special Purpose Fund (SPF): To be set up within ANRF, this fund will hold the ₹1 lakh crore corpus, acting as a centralized pool for disbursal to implementation agencies and second-level fund managers.

2. 2nd-Level Fund Managers: These intermediaries—ranging from public financial institutions to private VCs and NBFCs—will allocate funds to R&D projects primarily via:

   • Long-term concessional loans (low or zero interest)

   • Equity investments (especially for startups and early-stage tech ventures)

   • Participation in Deep-Tech FoF and other sector-specific innovation vehicles

This innovative structure ensures flexibility in funding while retaining oversight and risk mitigation mechanisms.

Impact on the Indian Innovation Ecosystem

The RDI Scheme is poised to deliver wide-ranging benefits:

• De-risking Private R&D Investment: With government-backed capital, companies can take bolder technological bets.

• Strengthening IP and Patents: Incentivizing the creation of homegrown intellectual property, reducing foreign royalty payments.

• Enabling Job Creation: High-value jobs in research, technology, and engineering sectors will be generated.

• Improving Global Rankings: Boost India’s position in the Global Innovation Index, R&D intensity, and high-tech exports.

Strategic Alignment with National Missions

The RDI Scheme dovetails with existing flagship missions such as:

• Atmanirbhar Bharat (Self-Reliant India)

• Startup India

• Make in India

• Digital India

• National Deep-Tech Startup Policy (under draft)

• National Quantum Mission

It also strengthens India’s readiness for global supply chain leadership, particularly in sectors of semiconductor fabrication, aerospace, and advanced manufacturing.

Looking Ahead: Towards Viksit Bharat @2047

As India marches toward its centenary of independence in 2047, the RDI Scheme is a strategic investment in the knowledge economy of tomorrow. It acknowledges that future national power will be defined by technology leadership, and prepares India to lead in emerging domains.

With the private sector as a key engine of innovation, supported by the state in a facilitating role, the RDI Scheme reflects a mature, globally competitive innovation policy framework.