Union cabinet approves Rs 1 Lakh crore RDI scheme to boost innovation ecosystem

The Union Cabinet, led by Prime Minister Narendra Modi, has approved the Research, Development and Innovation (RDI) Scheme, with a corpus of Rs1 lakh crore. This marks a landmark step in strengthening India’s research and innovation ecosystem.

The primary objective of the RDI Scheme is to stimulate private sector investment in research, development, and innovation by offering long-term financing or refinancing with extended tenors at low or zero interest rates. The scheme recognises the vital role of the private sector in fostering innovation and commercialising research outcomes.

Designed to overcome the financial constraints faced by the private sector, the scheme aims to provide growth and risk capital to strategic and emerging industries. It seeks to support innovation, promote the adoption of advanced technologies, and enhance competitiveness across key sectors.

Key objectives of the RDI scheme

• Encourage increased private sector investment in RDI across sunrise sectors and other areas critical to self-reliance, strategic interests, and economic security.

• Support innovative projects at higher Technology Readiness Levels (TRLs).

• Promote the acquisition of essential or strategically significant technologies.

• Facilitate the establishment of a Deep-Tech Fund of Funds.

The scheme will be guided by the Anusandhan National Research Foundation (ANRF), with the Prime Minister serving as Chair of its Governing Board. This board will provide strategic oversight for the scheme. The Executive Council (EC) of the ANRF will be responsible for approving operational guidelines, recommending second-level fund managers, and determining the types and scales of projects eligible for support in priority sectors.

Funding structure

The RDI Scheme will operate through a two-tier funding mechanism. At the first level, a Special Purpose Fund (SPF) will be established within the ANRF to act as the primary custodian of funds. These resources will then be allocated to a variety of second-level fund managers.

The majority of funding will take the form of long-term concessional loans, typically offered at low or zero interest rates to support R&D projects. In addition, equity-based financing may be employed, particularly for start-ups. Contributions may also be made to the Deep-Tech Fund of Funds or other similar funds dedicated to RDI.

By addressing the pressing need for affordable, long-term financing in the private sector, the RDI Scheme aims to build a robust innovation ecosystem. This initiative is a key step towards realising the vision of a self-reliant and globally competitive India, aligning with the national goal of achieving ‘Viksit Bharat’ by 2047.