PM Modi rolls out ₹1 trn RDI fund for 'high-risk, high-impact projects'

The nodal ministry for the RDI fund is the Department of Science and Technology (DST), which will operate through a two-tier funding structure

Prime Minister Narendra Modi on Monday unveiled a ₹1 trillion research, development and innovation (RDI) fund aimed at spurring private sector-led research and technological advancement across the country. 

 

The announcement was made at the inauguration of the Emerging Science, Technology and Innovation Conclave (ESTIC) 2025, marking one of the government’s major steps to institutionalise innovation financing.

 

The Department of Science and Technology (DST) will serve as the nodal ministry for the fund, which will operate through a two-tiered structure. 

 

At the first level, a Special Purpose Fund (SPF) under the Anusandhan National Research Foundation will act as the custodian. Rather than investing directly in startups or companies, the SPF will channel capital through a second layer of professional fund managers.

 

 

They include alternate investment funds (AIFs), development finance institutions (DFIs), non-banking financial companies (NBFCs),  and focused research organisations (FROs) such as the Technology Development Board (TDB), Biotechnology Industry Research Assistance Council (BIRAC), and IIT Research Parks.

 

Financing under the RDI fund will take the form of long-term, low-interest — or in some cases, interest-free — loans, equity infusion (especially for startups), and allocations to the deeptech fund of funds. The scheme doesn’t support grants and short-term loans. 

Priority areas include energy security and transition, quantum computing, robotics, space technology, biotechnology, and artificial intelligence (AI).

 

The global order is witnessing a fundamental shift, and the pace of change is not liner but exponential, the prime minister said in his address. “For the first time, capital is being allocated specifically for high-risk, high-impact projects, ensuring support for ground-breaking endeavours.”

 

He added that the government is prioritising the “ease of doing research” to foster a modern innovation ecosystem.

The startup community has lauded the initiative, calling it a catalyst and forward-looking step towards promoting research and innovation. “The fund is a decisive step towards building India’s innovation capital framework,” said Rajat Tandon, president of the Indian Venture and Alternate Capital Association. “It lays the foundation for a new era of public-private collaboration in research and technology, anchored in long-term, risk-taking patient capital.”

 

Manu Iyer, general partner at deeptech venture firm Bluehill.VC, said the RDI fund will bridge the gap between early-stage research and commercial deployment. "This not only empowers startups to take bigger risks in deep tech and frontier solutions but also creates a collaborative ecosystem where academia, industry, and entrepreneurs can co-innovate. Over time, this will accelerate the translation of research into commercialisation and position India as a global innovation hub."

 

He said the fund will help ramp up capabilities to build sovereign technologies in the space, defence, semiconductors, and biotech sectors.

 

Cdr Navneet Kaushik, founder and managing partner of defence-tech investor Jamwant Ventures, praised the fund’s design and inclusivity. “The fund will not only invest in promising startups through AIFs and other instutitions like TDB and BIRAC but will also extend patient capital to established industries at competitive rates, enabling sustained research and long-term innovation programmes, typically beyond the scope of short-term venture financing.”

 

Karan Mehta, venture principal at Green Frontier Capital, noted that the structuring of AIF mandates would be crucial to determining how effectively capital flows through the ecosystem.

 

Kushal Bhagia, founder and partner at All In Capital, highlighted the fund’s potential to address India’s underinvestment in R&D, currently around 0.6 per cent of GDP compared with China’s 2.4 per cent. This fund could meaningfully boost investor appetite to underwrite technical risk and strengthen startups’ intellectual property-driven competitiveness, he said.

 

Ashwin Raguraman, co-founder and partner at Bharat Innovation Fund, called the initiative “a statement that India is looking to evolve into a nation of creators”. He added that it would help attract complementary global capital into the deeptech ecosystem.

 

Deeptech startup Mindgrove Technologies echoed this sentiment. "By putting research and innovation at the centre of national growth, the initiative enables sustained investment in long-term scientific inquiry, de-risks early-stage research, and fosters stronger collaboration between academia, industry, and startups," said Shashwath T R, co-founder and chief executive officer.

 

According to market intelligence platform Tracxn, investments in India’s deep-tech sector rose from $1.3 billion across 436 rounds in 2023 to $1.52 billion across 456 rounds in 2024. Year-to-date investments for 2025 stand at $1.44 billion across 248 rounds. 

How the fund will operate

• Department of Science and Technology will be the nodal ministry and fund will operate through two tiers:

 Level I:  Special-purpose fund under Anusandhan NRF will be principal custodian

 Level II: Capital to be deployed via professional managers — AIFs, DFIs, NBFCs, and FROs

• Financing modes: Long-tenure, low or zero-interest loans, equity infusions for startups, and allocations to the deeptech FoFs

No grants or short-term lending

• Focus areas: Energy security and transition, quantum computing, robotics, space technology, biotechnology, and AI