Research, Development and Innovation (RDI) Fund

The Research, Development and Innovation (RDI) Fund, officially the RDI Scheme, is a ₹1 lakh crore government fund meant to push private companies and startups to do more research. Instead of giving grants, it mainly gives long-term loans at very low or zero interest. It focuses on risky, high-impact technologies in "strategic and sunrise" sectors. It is housed inside the Anusandhan National Research Foundation (ANRF).

Why does it exist?

Research is risky. A company may spend years on a new battery or drug, and it may still fail. Normal banks do not like to lend for such projects, and venture capital often wants quick profits. So Indian companies spend little on R&D. The RDI Fund acts like a patient, low-cost lender. It is a bit like a parent lending money to a child to start a business, with no interest and a long time to pay back.

Where did it come from?

• The Union Budget 2024-25 announced a ₹1 lakh crore fund to boost private-sector research and innovation.
• The Union Cabinet approved the RDI Scheme on 1 July 2025.
• The Union Budget 2025-26 set aside ₹20,000 crore for it.
• The Prime Minister launched it on 3 November 2025, at the Emerging Science, Technology and Innovation Conclave (ESTIC) 2025.

How does the money flow?

The scheme uses a two-tier (two-level) model:

• Tier 1: The government gives ₹1 lakh crore over six years to a Special Purpose Fund (SPF) set up inside ANRF. This money is given as a 50-year interest-free loan. The SPF is the custodian (keeper) of the money.
• Tier 2: The SPF passes money to Second-Level Fund Managers (SLFMs). These can be Alternative Investment Funds (AIFs), Development Finance Institutions (DFIs), Non-Banking Financial Companies (NBFCs) and others. The Technology Development Board (TDB) and the Biotechnology Industry Research Assistance Council (BIRAC) were among the first approved SLFMs.
• The fund managers then choose companies and projects and give them money.

What kind of support does it give?

• Long-term loans at low or zero interest rates.
• Equity (buying a share of ownership), mainly for startups.
• Contributions to Deep-Tech Funds of Funds or other funds focused on research.

It mainly supports projects at Technology Readiness Level (TRL) 4 or higher. This means the idea has already been proven in a lab, and the money helps turn it into a real, working product.

Who governs it?

• ANRF Governing Board (chaired by the Prime Minister): gives overall strategic direction.
• ANRF Executive Council: approves guidelines, selects second-level fund managers and suggests the scope of projects in sunrise sectors.
• Empowered Group of Secretaries (EGoS): chaired by the Cabinet Secretary. It approves changes to the scheme, sectors and types of projects, and reviews performance.
• Department of Science and Technology (DST): the nodal department that implements the scheme.

Commonly confused concepts

• RDI Fund vs ANRF grants: ANRF grants are mostly free money for research in universities and labs (basic research, up to about TRL 4). The RDI Fund gives loans and equity to companies to take research from the lab to the market (TRL 4 to TRL 9).
• RDI Fund vs Fund of Funds for Startups (FFS): The FFS (2016, run by SIDBI) invests in venture funds that back startups in general. The RDI Fund is focused on research-heavy, deep-tech work.
• Loan vs grant vs equity: A grant does not have to be paid back. A loan must be repaid, sometimes with interest. Equity means the investor owns part of the company and shares in its profit or loss.

Issues, criticism and the way forward

• Loans may not suit risky research: Critics say many deep-tech startups have no steady income, so even interest-free loans may be hard to repay. Grants or equity may suit them better.
• Slow use of money: Past government funds for startups were slow to reach companies. Choosing fund managers and projects quickly is a challenge.
• Crowding out: Some worry that government money could replace private money that would have come anyway, instead of adding to it.
• Way forward: Experts suggest clear timelines, transparent selection, a focus on truly new technologies and regular public reports on results.

Concepts to Know

• Sunrise sector: A new industry that is expected to grow fast in the future, such as green hydrogen, semiconductors, AI or quantum technology.
• Deep tech: Technology based on major scientific or engineering advances, which takes a long time and a lot of money to develop.
• Technology Readiness Level (TRL): A 1-to-9 scale that shows how close a technology is to real-world use. TRL 1 is a basic idea; TRL 9 is a proven product in actual use.
• Alternative Investment Fund (AIF): A privately pooled investment fund, regulated by SEBI, that invests in things like startups and private companies.
• Fund of Funds: A fund that does not invest directly in companies; it invests in other funds, which then invest in companies.