Union Budget 2026-27: Centre tops up RDI fund with ₹20,000 crore

The Centre has doubled down on its research and innovation push, adding Rs 20,000 crore to the RDI fund as officials aim to appoint more fund managers and speed up investments

In her ninth Budget on Sunday, Finance Minister Nirmala Sitharaman topped-up the Research, Development, and Innovation (RDI) fund with a ₹20,000 crore allocation, similar to last year’s budgetary allocation.  

 

Of the ₹23,125 crore earmarked for all the central sector schemes/projects under the Ministry of Science and Technology, the RDI fund accounts for the largest share, according to Budget documents. Of the allocations made for financial year 2026 (FY26), ₹3,000 crore have been used so far, revised estimates showed.

 

“Currently, only the Biotechnology Industry Research Assistance Council (BIRAC) and the Technology Development Board (TDB) have been appointed as the second level fund managers and that is the reason we could not spend the entire ₹20,000 crore. The total fund size is ₹1 trillion, and as per the cabinet approval, the fund needs to be deployed over a period of seven years,” said Abhay Karandikar, Secretary of the Department of Science and Technology (DST), at the post-Budget press conference.

 

 

For second-level fund managers other than BIRAC and TDB, like alternate investment fund structures, development finance institutions and non-banking finance companies, the government has received a total of 193 applications, he added.

 

Responding to a question by Business Standard on the selection timeline of applications and further investment into startups, Karandikar, said, “By April-May timeframe, we will select a few fund managers, and then the fund managers may take another 6-8 months to actually make their (investment) decisions. Given the last date of applications was January 31, we have not yet looked at the data. So, we will not be able to comment on what types of fund managers are there and how many will be selected. We will be able to say that only after the analysis.”

 

The RDI fund was formally launched in November last year by Prime Minister Narendra Modi. DST is the nodal ministry for the fund.

 

Industry leaders have welcomed the continuous focus on research and development in the Budget. Pranav Pai, managing partner of 3one4 Capital, which has applied for the first call for second-level fund managers, said, “As active investors in Indian deep tech, we believe this scheme will galvanise robust private sector participation in indigenous R&D and provide the institutional framework our startups have long needed to compete against well-funded, state-sponsored global competitors.”

 

Anil Joshi, founder and managing partner at Unicorn India Ventures, echoed this. “The ₹20,000 crore allocation is a clear signal of the government’s seriousness in backing research and development and accelerating India’s transition into a true product nation. Patient capital of this nature is critical for long-gestation, high-risk R&D projects that traditional funding structures often struggle to support.” The firm intends to explore the opportunity to apply for the second-level fund manager position in the next round.

 

As part of the fund structure, the amount will be transferred from the Consolidated Fund of India to the Special Purpose Fund (SPF) at a nil interest rate for 50 years. SPF, which is being set up under the Anusandhan National Research Foundation, will act as a first-level custodian. The amount will then flow to the second-level custodians, and then to startups.