 "Research fund, deep tech, RDI scheme, ANRF, startups, innovation, Cabinet, Siddarth Pai, Anjali Bansal, Ajai Chowdhry")
Over the past decade, India has quietly but decisively transformed into an emerging tech powerhouse. Under Prime Minister Narendra Modi’s leadership, the country’s innovation ecosystem has matured rapidly, fuelled by bold policies, strategic investments, and a push for technological self-reliance. The goal is now unmistakable: to position India as a future-ready economy, driven by homegrown breakthroughs.
On July 1, the Union Cabinet approved a historic and bold initiative to set up a ₹1 trillion Research, Development and Innovation (RDI) Fund aimed at spurring a private sector-driven R&D ecosystem. It’s a long-term support for India’s ability to lead global innovation. A specific allocation of ₹20,000 crore has already been made this year. The fund arrives at a crucial juncture — when India’s innovation ambitions are accelerating, and the global technology landscape is undergoing rapid transformation.
Sunrise sectors: Where the opportunity lies
With over 170,000 registered startups and 100+ unicorns, India is now the world’s third-largest startup ecosystem. What was earlier motivated by jugaad is now being power-driven by institutional support and structured innovation. Not only are startups creating employment but they are also bolstering the economic fabric of tier 2 and tier 3 cities.
The government policy support has remained in step. Schemes like the Startup India Seed Fund, Fund of Funds, Credit Guarantee Scheme and abolition of the angel tax have been game changers. These interventions have reduced entry barriers, sparked ambition, and allowed a new generation of entrepreneurs to build with scale and confidence. In Modi 3.0, the spotlight has now decisively shifted in the direction of deep-tech and advanced manufacturing. The entrepreneurial wave unfolding now, will be all about building global deep-tech products in sunrise sectors.
Sunrise sectors have long gestation periods and entail high risk tolerance – elements rarely found in conventional funding models. Some of these sunrise sectors requiring patient capital include energy security and climate action; deep technology including quantum computing, robotics and space; artificial intelligence and its application to address challenges in agriculture, health, education, biotechnology, bio-manufacturing, synthetic biology, pharmaceuticals, and medical devices; and digital economy including digital agriculture.
Financing the future: Patient capital for deep tech
As it has been globally established, cutting-edge innovations require patient capital, access to high-end infrastructure and strong technical talent. A key step in providing patient capital has been taken in the RDI fund and Deep Tech Fund of Funds. It demonstrates the government's willingness to support high-risk, high-reward innovation.
The broad objectives of the fund include encouraging the private sector to scale up research, development, and innovation in sunrise sectors as outlined above and financing projects at higher levels of Technology Readiness Level (TRL) of four and above. Any other sector, which may be considered important for the country, can also be considered by an empowered group of secretaries as envisaged in the RDI scheme approved by the Cabinet. The fund can even support acquisition of technologies. The scheme also envisages setting up of a Deep Tech Fund of Funds.
RDI scheme will operate through a two-tiered funding structure. At the first level, a special purpose fund (SPF) will be established within the Anusandhan National Research Foundation (ANRF), which will serve as the custodian of the ₹1 trillion corpus.
The executive council of ANRF will finalise the scheme’s implementation guidelines.
This fund will not directly invest in industries but will channel capital to second-level fund managers who can be alternative investment funds (AIF), development finance institutions (DFI), non-banking financial companies (NBFCs), among others.
Financial support decisions will be made by second-level fund managers through investment committees comprising experts from financial, business, and technical domains — operating at an arm’s length from the government.
The selection of the second-level fund managers will be carried out by the executive council of ANRF, with approval from the Empowered Group of Secretaries. These fund managers will then deploy resources to specific R&D projects through long-term, concessional loans as well as equity. Flexible financing structure will allow the private sector to innovate without the pressure of near-term returns. This could significantly boost India's deep-tech ecosystem and catalyse private sector R&D investments.
Notably, the scheme is not intended to fund academic R&D or provide grants-in-aid; its mandate is to scale private sector-led research and innovation. ANRF already provides grants to support early to mid-stage (TRL 1–4) research in academia and research labs — complementing the RDI Fund’s focus on later-stage innovation in the private sector.
Is India’s private sector ready to lead in deep tech?
Historically risk-averse, industry has always shied away from significant investments in high-risk R&D because of long cycles of returns. In terms of gross expenditure on R&D in the country, the Indian private sector’s share is only about 35 per cent – far lower than the 70-80 per cent seen in most advanced economies. The historic opportunity created by the decision of the Union Cabinet calls for confidence and conviction — qualities that can catalyse private sector participation in deep-tech R&D and drive India into the forefront of emerging, high-impact technologies.
Towards a product economy
To truly lead, India must go beyond being a service economy. We must become a product economy — with strategic autonomy in critical technologies. The time is ripe for India to take a leap and expand its research ecosystem to a larger, transformed system where the private sector participates in R&D across the value chain — right from research to commercialisation. Deep-tech revolutions cannot happen in research labs and academia alone. They need risk-takers as well. The government has opened the door. Now it’s time for Indian industry and innovators to walk through it.
The writer is Secretary, Department of Science and Technology, Government of India
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
