On 3 November 2025, Prime Minister Mr. Narendra Modi inaugurated the Emerging Science, Technology and Innovation Conclave (“ESTIC 2025”) and launched the Research, Development and Innovation (“RDI”) Scheme – where the Government has proposed to invest INR 1 lakh crores (Roughly USD 12 billion) as an initiative to bolster private R&D investment in India, transform the economy into a global technology hub and fostering intellectual property development.
Over the past few years, deep-tech supporting policies have been introduced such as National Geospatial Policy 2022, Indian Space Policy 2023, BioE3 Policy 2024 and others, including several missions such as India Semiconductor Mission, National Super Computing Mission etc. This new announcement provides more teeth to the various policies, missions and mandates that India has been witnessing over the past few years.
A shift from Grants to structured Investment:
The RDI scheme provides for long term equity and debt (re)financing with low or nil interest rates. Further, Department of Science and Technology serves as nodal Ministry for operationalizing the scheme though Special Purpose Fund (“SPF”) under the Anusandhan National Research Foundation (ASRF). DST has been active earlier too with their debt + equity model of investment. Example: their earlier investments to IIM Bangalore Innovation’s cohort companies.
The funds are proposed to be set up in two ways:
-
- Tier 1: The SPF (First Level Fund Manager) will be housed within the ASRF, which will act as the custodian.
- Tier 2: Second Level Fund Manager (“SLFM”) The implementation will be through fund manager such as Alternative Investment Funds (AIF), Development Finance Institutions, Non-Banking Finance Companies (NBFC) and Focused Research Organisations, such as the Technology Development Board, BIRAC and IIT Research Parks.
The SPF with a six year tenure, seeks to back deep-tech ventures, research intensive enterprises, and focused research organisations who specialize in “sunrise sectors” including AI, quantum computing, healthcare, agriculture, education, energy security and storage, robotics, biotechnology etc.
The selection process of SLFMs weighs in heavily on “Quality” with in-depth review of their track record, technical expertise along with “Cost”, where 80% weightage will be on the quality parameters and 20% on costs such as the fees and carried interest. Read more here https://rdifund.anrf.gov.in/images/pdf/IG_Web_Copy.pdf
Eligibility
Entities seeking funding must satisfy the following eligibility conditions:
-
- Incorporation in India: Only entities registered and headquartered in India qualify.
- Indian control: Entities must be “controlled” by resident Indian citizens, as per FDI norms.
- Minimum Technology Readiness Level 4 (TRL 4) or higher.
- Intellectual Property: IP arising from these funded projects must be registered and ownership retained in India.
Legal Implication for SLFM fund managers
SLFMs who wish to participate will have to design their fund documents, such as private placement memorandums and term sheets to align with the RDI guidelines. With government participation, there will be new added layers to tranching mechanisms and other adjustments tied to project risks. Instruments being issued will have to comply with SEBI AIF norms as well.
Given the fund’s public character, it would be important to note that SLFMs who choose to participate will be subject to heightened reporting and audit oversight. The Research Foundation may also request progress reports, performance at the different stages of selection. Non-compliance in these aspects could lead to disqualification. Exit modalities is largely at the discretion of the funds.
IP and foreign investment
The most important provision is the mandatory intellectual property ownership and registration in India, with a strong indication of value-creation to be in India and retained in India.
The General Partners and Investment Managers will have to diligence IP strategy, localization, licensing mechanisms adopted by the investee companies. Further, the threshold limits of foreign ownership in companies needs more attention. It is a practice to invest into holding companies and with that criteria, we will see more FDI flow into the country, rather than companies being set up outside India.
We believe that Series B, C and onward rounds along with exits, including IPO, will be more streamlined to ensure companies are headquartered in India.
There are some questions that require clarifications: If after the investment, the investee companies pivot to different business or may externalize their holding company for various business reasons, thereby the investment conditionalities are not met, what is the recourse?
The witnessing of a new strategic shift
The RDI Fund signals three key shifts – Firstly, we see the Government taking on a stronger role of a strategic investor, rather than “Grants”. Secondly, India’s innovation push is now aligning with the other powerful nations, and thirdly the emphasis of localization of intellectual property will lead to broadening the scope of domestic intellectual capital.
The Government has opened applications under the Notice Inviting Applications issued on November 3, 2025, to solicit proposals from fund managers (SLFMs) and qualified applicants will have a chance to receive capital from the RDI fund.
Author: Mr. Nitin Thomas, Associate at NovoJuris Legal