Recently vide a press release dated 1st July 2025, it has been announced that the Union Cabinet has approved the Research Development and Innovation (“RDI”) Scheme, with a total outlay of ₹1 lakh crore. The initiative aims to address long-standing funding challenges faced by the private sector and encourage greater participation in high-impact R&D activities, particularly in emerging and strategic sectors.
The RDI Scheme aims to provide long-term financing or refinancing options, at low or even zero interest rates, to catalyse private sector investment in research, development, and innovation. Recognizing that the private sector plays a pivotal role in turning research into commercially viable technologies, the RDI Scheme intends to provide both growth capital and risk capital to fuel deep-tech ventures and next-generation solutions.
What the RDI Scheme Aims to Achieve
The scheme focuses on four key objectives:
- 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;
- Finance transformative projects at higher levels of Technology Readiness Levels (“TRL”).
- Support acquisition of technologies which are critical or of high strategic importance:
- Facilitate setting up of a Deep-Tech Fund of Funds.
How the Scheme Will Work
The RDI Scheme will follow a two-tiered funding model:
- At the first level, a Special Purpose Fund (“SPF”) will be created within the Anusandhan National Research Foundation (“ANRF”). This fund will serve as the central pool of resources.
- From the SPF, funds will be allocated to second-level fund managers, who will disburse them primarily as long-term concessional loans. Equity funding may also be explored, particularly to support startups and early-stage ventures.
The ANRF which has been established to seed, grow and promote R&D and foster a culture of research and innovation in the country, will provide overarching strategic direction to the RDI Scheme. Its Executive Council will be responsible for approving detailed guidelines, selecting second-level fund managers, and identifying the types of projects and sectors that should be prioritized.
Oversight and accountability will be further ensured through an Empowered Group of Secretaries, which will have the authority to make course corrections, approve changes to the RDI Scheme, and review overall performance. The Department of Science and Technology has been designated as the nodal department for the Scheme’s implementation.
Looking Ahead
By addressing a crucial gap of long-term and affordable financing for innovation, the RDI Scheme is likely to unlock new possibilities for deep-tech ventures and attract Indian talent, including researchers and technology scientists who are based globally, to build and scale their work in India.
While the Scheme has been an optimistic move across the innovation ecosystem, some industry stakeholders have expressed concerns about the current composition of the governing board of ANRF, which lacks industry representation. Many have suggested to include experienced industry leaders and global experts alongside academics and bureaucrats to ensure that the Scheme remains industry-aligned. If implemented effectively and inclusively, the RDI Scheme could mark a turning point in India’s journey toward becoming a global innovation powerhouse.
Author: Mr. Jay Datta, Associate, Technology Practice Group
