02.07.2025
Research Development and Innovation (RDI) Scheme
Context
Recently, the Union Cabinet, chaired by the Prime Minister, approved the Research Development and Innovation (RDI) Scheme with a funding of amount ₹1 lakh crore.
About the News
- The RDI Scheme aims to boost private investment in research, development, and innovation.
- It provides long-term, low or zero interest loans to private sector R&D projects.
- The scheme focuses on sunrise and strategic sectors to enhance national self-reliance.
- A two-tier fund structure will manage and distribute funds under this scheme.
Funding Mechanism
- The scheme will follow a two-layered funding system to back private innovation.
- A Special Purpose Fund (SPF) will be set up under the Anusandhan National Research Foundation (ANRF) to manage the main pool of money.
- Funds from the SPF will be passed on to secondary-level fund managers for distribution.
- These managers will offer long-term financial assistance through low-interest or interest-free loans.
- Equity investment may also be used, especially to support startups and emerging ventures.
- Financial support could be extended to Deep-Tech Funds of Funds or similar platforms dedicated to high-tech innovation.
Significance of the Scheme
- The scheme aims to solve funding gaps faced by private R&D initiatives.
→ Especially in deep-tech and high-risk innovation domains.
- It will support technology acquisition and R&D at high readiness levels.
→ Projects near commercialization will get financial backing.
- A Deep-Tech Fund of Funds will be set up to support startups.
→ Promotes indigenous innovation in strategic technologies.
- Funding can be in the form of loans or equity, especially for startups.
→ Flexible model suited to both early and growth-stage ventures.
- Anusandhan National Research Foundation (ANRF) will govern the scheme’s strategic direction.
→ Chaired by the Prime Minister, ensuring top-level oversight.
- The Department of Science and Technology (DST) is the nodal department for implementation.
→ Responsible for policy execution and coordination.
Challenges
- Private sector R&D remains low in India compared to global standards.
→ Example: Indian private firms invest less than 0.3% of GDP in R&D.
- High risk and long gestation period deter private investment.
→ Example: Deep-tech projects take years before becoming profitable.
- Limited access to capital for small firms and startups.
→ Example: Many tech startups lack collateral for traditional bank loans.
- Coordination between multiple agencies may delay implementation.
→ Example: Overlapping roles of ANRF, DST, and fund managers need alignment.
Way Forward
- Awareness campaigns to inform startups about funding opportunities.
→ Example: Host webinars and state-level workshops on applying for RDI funds.
- Timely disbursal and transparent selection of second-level fund managers.
→ Example: Independent review panels for project selection.
- Encourage public-private partnerships for technology transfer.
→ Example: Private firms collaborating with IITs or CSIR labs.
- Focus on localising critical technologies to reduce import dependence.
→ Example: Indigenous semiconductor or battery technology development.
Conclusion
The RDI Scheme is a transformative step to make India a global innovation hub. With proper execution, it can bridge funding gaps and empower private players in high-impact technology sectors.