Research Development and Innovation (RDI) Scheme

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.