India launches a ₹1 lakh crore RDI Fund to boost deep-tech, AI, and startup innovation. Here’s how the scheme works, who benefits, and why it matters.
Brajesh Mishra
India has formally entered one of the most ambitious phases of its innovation journey.
On November 3, 2025, Prime Minister Narendra Modi has launched the ₹1 lakh crore Research, Development and Innovation (RDI) Fund at the Emerging Science, Technology and Innovation Conclave (ESTIC 2025) in New Delhi. The fund—cleared by the Cabinet in July—marks the largest government-backed push for private-sector R&D in India.
The amount, Modi clarified during the launch, would not sit unused. “This amount is for you,” he told a reserved audience, signaling that the funds are now officially in deployment mode.
India’s R&D spending has long lagged global peers. The country invests around 0.63–0.7% of GDP in R&D, compared with:
In absolute terms, China’s annual R&D spending—about $500 billion—is nearly five times India’s.
The gap isn’t just academic. It affects competitiveness in areas like semiconductors, biotechnology, advanced materials, and artificial intelligence—sectors expected to define economic leadership over the next decades.
The government’s framing of this fund responds to a structural weakness: the “valley of death” for Indian deep-tech companies.
Seed capital in India has grown, but mid- and late-stage funding plummeted in recent years—66% to 92% declines between 2022 and 2023. Deep-tech founders frequently report long development cycles, capital scarcity, and lack of patient financing.
The RDI Fund specifically targets Technology Readiness Level 4 and above—where research transitions to commercialization. Typical support is expected between ₹50–300 crore per project.
The aim is simple: allow long-horizon innovation to survive long enough to scale.
Rather than disbursing grants directly, the government has created a two-tier investment structure:
Investment decisions will be made by independent expert committees, not government departments. Loans from the government to the ANRF are interest-free for 50 years, enabling patient capital deployment into industry.
This arm’s-length structure is a key design feature, intended to avoid bureaucratic interference in technology selection.
The ecosystem is being led by a technocratic bench:
Their shared message: India must shift from a services-led economy to a product and IP-driven economy.
Expected beneficiaries include:
These align closely with India’s technology sovereignty priorities.
The scheme will run for six years, with ₹20,000 crore allocated in FY 2025-26.
Early response from industry leaders has been positive, particularly on the fund’s governance architecture and long-term approach. Infosys co-founder Kris Gopalakrishnan called the model a potential “energizer for deep-tech capital in India.”
Still, execution remains the test. The challenge is not announcing capital—it is deploying it efficiently, transparently, and consistently across cycles.
The RDI Fund signals a strategic shift: India is betting on patient innovation finance rather than short-cycle incentives. If implemented well, it could strengthen domestic technology capability, spur commercialization, and reshape India’s research pipeline over the next decade.
Outcomes will depend on:
For now, the launch marks a milestone: India has put serious, structured money behind deep-tech and R&D for the first time at this scale.
The question ahead is not whether the capital is historic—but whether the system built to move it can stay disciplined enough to transform India's innovation future.
What is the RDI Fund?
A ₹1 lakh crore government-backed fund to support private-sector research, development, and deep-tech innovation in India.
When was it launched?
November 3, 2025, at the Emerging Science, Technology and Innovation Conclave (ESTIC 2025) in New Delhi.
Who launched it?
Prime Minister Narendra Modi.
Why does it matter?
India invests only ~0.7% of GDP in R&D — far behind global leaders. This fund aims to close the “deep-tech funding gap” and support long-gestation technologies.
How will the money be deployed?
Through a two-tier structure:
Government → Anusandhan National Research Foundation (ANRF) → professional fund managers (AIFs, NBFCs, DFIs).
What sectors will it focus on?
AI, semiconductors, quantum tech, biotech, energy, advanced materials, space technologies.
How long will the scheme run?
Six years.
When will companies start getting funds?
First disbursements expected in 2026.
Is it a grant scheme?
No. Funds include long-term (50-year) interest-free loans, equity participation, and a Fund-of-Funds model — designed as patient capital, not subsidies.
Who is overseeing it?
Department of Science & Technology (DST) and ANRF, led by experts including
Dr. Abhay Karandikar and Dr. Shivkumar Kalyanaraman.
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