Research Development and Innovation (RDI) Scheme

The scheme was recently approved by the Union Cabinet chaired by the Prime Minister of India, with a corpus of Rs. 1 lakh crore.

What is the Research Development and Innovation (RDI) Scheme?

• Initiated by: Ministry of Science and Technology, Government of India.

  Purpose: To incentivize private sector investment in basic and applied research leading to innovative products and technologies.

  Funding: Rs 1 lakh crore over 50 years, provided as an interest-free loan to the Anusandhan National Research Foundation (ANRF).

  Distinctive Feature: Exclusively targets the private sector, unlike ANRF grants which mostly go to academic institutions.

Purpose and Aim

• Provide long-term financing/refinancing with long tenors at low or zero interest rates.

  Overcome funding challenges faced by the private sector in research, development, and innovation (RDI).

  Offer growth and risk capital to sunrise and strategic sectors to facilitate innovation, technology adoption, and enhance competitiveness.

Key Objectives:

• Encourage scaling up of RDI in sunrise and strategic sectors critical for economic security, self-reliance, and strategic advantage.

  Finance transformative projects at higher Technology Readiness Levels (TRL).

  Support acquisition of critical or high-strategic importance technologies.

  Facilitate establishment of a Deep-Tech Fund of Funds to promote startups and innovation.

Funding Mechanism

• Two-tiered structure:

  1. Special Purpose Fund (SPF) within the Anusandhan National Research Foundation (ANRF) acts as custodian of the Rs 1 lakh crore fund.

  2. SPF allocates funds to second-level fund managers, primarily as long-term concessional loans (low or zero interest).

  Financing options:

• Long-term loans for R&D projects.

• Equity investments, particularly in startups.

• Contributions to Deep-Tech Fund of Funds or other RDI-focused funds.

Governance & Execution

• Strategic direction: Provided by the Governing Board of ANRF, chaired by the Prime Minister.

  Policy guidelines & approvals: Handled by the Executive Council (EC) of ANRF, including selection of second-level fund managers and project scopes.

  Oversight and review: Managed by an Empowered Group of Secretaries (EGoS), led by the Cabinet Secretary. EGoS approves scheme changes, sectors, projects, and fund managers, and monitors performance.

  Implementation nodal agency: Department of Science and Technology (DST).

Why India Needs This Scheme: Challenges in Private Sector R&D

• Low private R&D spend: Only about 0.2% of GDP, much lower than advanced economies.

  Weak industry-academia linkages: Lack of collaboration, trust issues, and IP disputes.

  Market & funding gaps: Early-stage tech (TRL 3-6) faces “valley of death” underfunding.

  IP challenges: Long patent approvals, costly litigation, and weak enforcement.

  Talent shortage & infrastructure: Brain drain, skill mismatches, costly labs, limited access to public R&D facilities.

  Risk aversion: Cultural barriers reduce innovation risk-taking.