New Delhi: The recently launched Rs 1 lakh crore Research Development and Innovation (RDI) fund, particularly focused on India’s private sector, aims to support the private research and innovation mindset among players and mitigate the financial risks associated with it.

 

Speaking at a workshop organised by the Department of Science and Technology (DST) and the industry chamber FICCI, Secretary of the DST, Abhay Karandikar, has asserted that, largely, the private sector has “shied away from investing” in cutting-edge technology development, which at times requires longer gestation periods.

 

The DST, quoting their own estimates, noted that the gross expenditure on R&D by the private sector continues to be in the range of 30-35 per cent of their total expenditure.

 

“And generally, it has been seen that the private sector has shied away from investing in cutting-edge technology development, which requires longer gestation periods,” the DST Secretary Karandikar added.

 

Understanding the issues the private sector faces in doing R&D that has a long gestation period, the government, according to the Secretary, brought in this Rs 1 lakh crore RDI corpus.

 

Innovating technologies that require, let’s say, five to ten years to mature and turn into a deployable, commercialisable product tend to become difficult for private players in India.

 

“Such a long gestation period also entails that kind of uncertainty  and we have seen that you know the industry and the private sector investments  in those cutting edge R &D sectors has lacked in India, and to address that gap, therefore the government decided to (support under the RDI scheme).”

 

“…we want to increase the investment of the private sector R&D but then there are inherent business risks and the commercial risks that are involved and obviously therefore we will not be able to attract the private sector investment unless those commercial and business risks are mitigated,” the secretary further said, providing rationale behind the RDI scheme launch.

 

Among the objectives of the RDI scheme is to catalyse the private sector investment in sunrise sectors.

 

Prime Minister Narendra Modi on November 3 launched the Rs 1 lakh crore Research Development and Innovation (RDI) Scheme Fund, which was initially announced in the interim Budget of 2024-25. The corpus will provide long-term financing or refinancing with long tenors and low or nil interest rates, Finance Minister Nirmala Sitharaman had said, presenting the 2024-25 interim Budget on February 1, 2024. This fund, she had said, will encourage the private sector to scale up research and innovation significantly in sunrise domains.

 

“The government thought that we can actually become a catalyst. We can start that movement. And then, hopefully, when these initial risks are mitigated, we will be able to attract the private sector investment at growth stage or scaling…,” the DST Secretary said.

 

He also highlighted the fact that there are about 1500 venture capital investment firms that are putting money into our startup ecosystem, but only a few invest in R&D, particularly in the cutting-edge deep tech sectors.

 

“And therefore, that needs to be now catalysed. And we believe that this Rs 1 lakh crore RDI fund is a step in the direction which will, in the coming years, catalyse 10x of this investment, hopefully from the private sectors and the other investors,” the secretary said.

 

The RDI scheme has a total outlay of Rs 1 lakh crore over 6 years, with Rs 20,000 crore allocated for FY 2025-26, funded from the Consolidated Fund of India. It offers long-term loans with low or zero interest, equity investments, and contributions to the Deep-Tech Fund of Funds. Grants and short-term loans are not provided under this scheme, Jitendra Singh, Union Minister of State (Independent Charge) for Science and Technology, Earth Sciences informed Rajya Sabha in a written reply on July 31, 2025.

 

During his address, he also emphasised the importance of obtaining quality and authentic data to facilitate regulatory reforms and position India in the global innovation index.

 

“…it is extremely important that India’s data which we submit is not only recent but also authentic, hasquality and therefore gives a true picture of this and this is extremely important for positioning our country in the global innovation space in the geopolitical context because these kinds of indicators attract investments, these kinds of indicators are helpful for negotiating on trade policies. And these kinds of indicators also become important in terms of technology arbitrage if we want to do as a nation,” the Secretary explained.

 

The Department of Science and Technology serves as the nodal agency for formulating policies and promoting the scientific research, technology and innovation ecosystem in India.