New Delhi : In a landmark move to strengthen India’s research and innovation ecosystem, the Union Cabinet, chaired by Prime Minister Narendra Modi, approved the Research Development and Innovation (RDI) Scheme on July 1, 2025. With a massive corpus of ₹1 lakh crore, this flagship initiative is poised to revolutionize private sector-led research and development (R&D) in strategic and sunrise sectors, fostering self-reliance, economic security, and global competitiveness. Union Minister Ashwini Vaishnaw, addressing a press briefing at the National Media Centre in New Delhi, emphasized the scheme’s transformative potential in bridging funding gaps and promoting innovation in critical areas such as artificial intelligence, semiconductors, and renewable energy.
Objectives of the RDI Scheme
The RDI Scheme is designed to address the financial constraints that have long hindered private sector participation in R&D, particularly in high-risk, capital-intensive projects. Its key objectives include:
- Encouraging Private Sector R&D: The scheme aims to spur private sector investment in research, development, and innovation, particularly in sunrise domains such as electronics, semiconductors, electric vehicles (EVs), renewable energy, agro and food processing, and healthcare and pharmaceuticals. It also targets sectors vital for economic security, strategic autonomy, and self-reliance.
- Financing High-TRL Projects: The scheme prioritizes funding transformative projects at higher Technology Readiness Levels (TRLs), which are closer to market readiness, to accelerate commercialization and scaling.
- Supporting Technology Acquisition: It facilitates the acquisition of critical and strategically important technologies, enabling India to strengthen its domestic capabilities in globally competitive areas.
- Establishing a Deep-Tech Fund of Funds: The initiative includes setting up a Deep-Tech Fund of Funds to provide growth and risk capital to startups and scale-ups in frontier technologies, fostering innovation in deep-tech sectors like AI and advanced materials.
By offering long-term financing or refinancing with low or nil interest rates, the RDI Scheme seeks to mitigate financial barriers, promote technology adoption, and enhance India’s global competitiveness.
Two-Tiered Funding Mechanism
The RDI Scheme operates through a robust two-tiered funding structure managed under the Anusandhan National Research Foundation (ANRF), established under the ANRF Act of 2023. The structure is designed to ensure efficient allocation and utilization of funds:
- Tier 1: Special Purpose Fund (SPF)
The SPF, established within the ANRF, serves as the central custodian of the ₹1 lakh crore corpus. It acts as a steward, allocating resources to second-level fund managers. The government will provide this corpus as a 50-year, interest-free loan to the ANRF, ensuring long-term financial sustainability. - Tier 2: Second-Level Fund Managers
These managers receive funds from the SPF in the form of long-term concessional loans or equity investments, particularly for startups. They assess and select specific R&D projects, channeling funds primarily as low or nil interest loans to private entities engaged in transformative research. Contributions to the Deep-Tech Fund of Funds or other multi-sector investment pools are also considered to support innovation-aligned ventures.
This funding model is tailored to provide growth and risk capital, especially for startups and micro, small, and medium enterprises (MSMEs) in high-growth sectors like deep-tech, AI, and green technologies.
Institutional Oversight and Governance
The RDI Scheme is governed by a robust institutional framework to ensure strategic direction and effective implementation:
- ANRF Governing Board: Chaired by Prime Minister Narendra Modi, the Governing Board provides overarching strategic guidance, ensuring alignment with national innovation goals, including the Make in India initiative and Atmanirbhar Bharat (self-reliant India).
- Executive Council (EC) of ANRF: The EC endorses the scheme’s guidelines, recommends second-level fund managers, and identifies the scope and type of projects in sunrise sectors.
- Empowered Group of Secretaries (EGOS): Led by the Cabinet Secretary, the EGOS approves scheme modifications, sectors, and project types, selects second-level fund managers, and reviews the scheme’s performance.
- Nodal Department: The Department of Science and Technology (DST) serves as the operational nodal agency, overseeing the scheme’s implementation and coordinating with stakeholders.
This collaborative framework between government and industry ensures the scheme aligns with India’s broader objectives under the National Deep Tech Strategy and Vision 2047.
Addressing India’s RDI Challenges
India’s research and innovation ecosystem faces several challenges, which the RDI Scheme aims to address:
- Underinvestment in R&D: India’s gross expenditure on R&D (GERD) has nearly doubled from ₹60,196 crore in 2010-11 to ₹1,27,381 crore in 2020-21. However, at approximately 0.65% of GDP, it remains significantly lower than competitors like China (2.4%) and South Korea (4.5%). The private sector contributes only 36-37% of total R&D spending, compared to over 70% in leading economies like the US, Japan, and China. The RDI Scheme seeks to bridge this gap by providing affordable, long-term financing.
- Weak Innovation Ecosystem: Less than 1% of India’s approximately 400,000 universities engage in high-quality research. Institutions like the Indian Institute of Science (IISc) and Indian Institutes of Technology (IITs) face procurement delays and restrictive funding mechanisms, hampering efficiency. The lack of advanced labs, semiconductor facilities, and R&D equipment further limits both basic and applied research.
- Talent Gaps: India faces a shortage of skilled researchers and scientists. The RDI Scheme, alongside initiatives like the ANRF’s Partnerships for Accelerated Innovation and Research (PAIR) program, aims to address this by fostering research careers and supporting interdisciplinary projects.
India’s RDI Ecosystem: Key Highlights
Despite these challenges, India’s RDI ecosystem has shown significant progress:
- Research Output: India ranks third globally in research output, producing over 3 lakh research papers in 2022, and sixth in patent grants, with over 30,490 patents in the same year.
- Startup Ecosystem: With over 120,000 startups supported by initiatives like Startup India, Atal Innovation Mission (AIM), and Atal Tinkering Labs, India is a global leader in deep-tech innovation. The DST has established mission hubs in quantum, cyber-physical systems, climate, and health technologies, supporting more than 600 startups.
- Government Investment: Government agencies like the Council of Scientific and Industrial Research (CSIR), Defence Research and Development Organisation (DRDO), Indian Council of Agricultural Research (ICAR), Department of Atomic Energy (DAE), and DST collectively account for over 54% of India’s R&D investment.
- Policy Support: The ANRF Act of 2023, which subsumed the Science and Engineering Research Board (SERB), manages a ₹50,000 crore budget (2023-28), with ₹14,000 crore from the public sector and ₹36,000 crore from industry and philanthropy. The RDI Scheme, initially announced in the 2024-25 Interim Budget with a smaller corpus, was scaled up with a ₹20,000 crore allocation in Budget 2025-26.
- One Nation One Subscription (ONOS): This scheme provides researchers at over 6,300 government colleges, universities, and R&D centers access to 12,000 international journals for three years, with a ₹6,000 crore budget.
- Strategic Infrastructure: The ANRF coordinates mission-focused projects in EV technology, advanced materials, AI-for-Science, and space-tech, enabling shared access to scientific equipment through a “Cloud of Research Infrastructure.”
Recommendations to Strengthen India’s RDI Ecosystem
To maximize the impact of the RDI Scheme, several recommendations have been proposed:
- Increase R&D Intensity: Encourage private firms to commit to multi-year R&D roadmaps, shifting focus from short-term fiscal cycles to long-term innovation. State governments should establish innovation grants tied to performance milestones in key sectors.
- Strengthen Innovation Infrastructure: Expand the “Cloud of Research Infrastructure” to over 10,000 shared labs and equipment centers. State Innovation Councils should coordinate with ANRF to standardize access, pricing, and maintenance.
- Enhance Talent Generation: Introduce 1,000 “Early Career Research Fellowships” (₹30 lakh/year) and 500 “National Professorships” (₹2 crore/5 years) to attract young scientists. Higher pay, flexible grants, and tenure-track pathways in universities and labs are also critical.
- Simplify Regulations: Address delays in grant approvals, which currently underutilize 30-40% of annual science grants. Recruit 5,000 new patent examiners, digitize workflows, and provide full tax exemptions for strategic R&D equipment to reduce costs and pendency.
Broader Context: Other Cabinet Decisions
Alongside the RDI Scheme, the Union Cabinet approved the ₹1-trillion Employment Linked Incentive (ELI) Scheme and the National Sports Policy 2025. The ELI Scheme aims to generate 35 million new jobs by 2027, offering financial benefits of up to ₹15,000 for first-time employees registered with the Employees’ Provident Fund Organisation (EPFO). Employers hiring additional staff will receive incentives ranging from ₹1,000 to ₹3,000 per employee, depending on their EPF base wage.
The National Sports Policy 2025 focuses on elevating India to the top five global sporting nations by scouting talent, hosting international events, promoting sports manufacturing, and integrating sports into the national education framework. It also encourages public-private partnerships and state-level sports policies.
Additionally, the Cabinet approved a ₹1,853 crore project to construct a 46.7-kilometer four-lane Paramakudi-Ramanathapuram highway in Tamil Nadu. Built under the hybrid annuity mode, the project will decongest traffic on National Highway 87 and enhance connectivity across southern Tamil Nadu.
Impact and Significance
The RDI Scheme is a pivotal step toward positioning India as a global innovation hub. By addressing funding gaps, fostering private sector participation, and supporting strategic technology acquisition, it aligns with India’s goals of self-reliance and competitiveness under Viksit Bharat 2047. The scheme’s focus on sunrise sectors like AI, semiconductors, and clean energy, coupled with its robust governance and funding mechanisms, ensures a conducive ecosystem for innovation. As India continues to scale its R&D investments and address systemic challenges, the RDI Scheme will play a critical role in driving technological advancement and economic growth.
Frequently Asked Questions (FAQs)
1. What is the RDI Scheme and why was it launched?
The Research Development and Innovation (RDI) Scheme is a ₹1 lakh crore government initiative aimed at boosting private sector-led R&D in India. It was launched to overcome financial and structural barriers that hinder innovation, especially in strategic and sunrise sectors like semiconductors, AI, renewable energy, and EVs. The goal is to foster self-reliance, global competitiveness, and technology advancement in alignment with Viksit Bharat 2047.
2. How will the RDI Scheme be funded and managed?
The scheme uses a two-tier funding model under the Anusandhan National Research Foundation (ANRF):
Tier 2: Second-level fund managers receive concessional loans or equity to support private R&D projects, especially for startups and MSMEs in high-tech sectors.
Tier 1: A Special Purpose Fund (SPF) within ANRF receives a ₹1 lakh crore, 50-year, interest-free loan from the government.
3. Who can benefit from the RDI Scheme?
The scheme targets private companies, startups, MSMEs, and academic-industry collaborations engaged in high-risk, transformative R&D. Beneficiaries include those working on high-TRL projects, deep-tech innovations, and strategic technology acquisition. Special emphasis is placed on fields like AI, advanced materials, green energy, and semiconductors.
4. What role does the ANRF play in the scheme?
The ANRF (created under the 2023 Act) oversees the implementation of the RDI Scheme through:
The Department of Science and Technology (DST) as the nodal agency for coordination and implementation
A Governing Board (chaired by the Prime Minister) for strategic direction
An Executive Council to define guidelines and select projects
An Empowered Group of Secretaries (EGOS) for performance review and approvals
5. How does the RDI Scheme address India’s R&D challenges?
India’s R&D suffers from low investment (0.65% of GDP), limited private sector contribution, inadequate infrastructure, and talent shortages. The RDI Scheme tackles these by:
Offering programs for research fellowships, labs, and startup support
Providing long-term, low/no-interest loans
Supporting technology acquisition and commercialization
Creating a Deep-Tech Fund of Funds
