Rupees 1 Lakh Crore RDI Scheme is Defining Leap for Indian Innovation Ecosystem

In a decisive and forward-looking move, the Union Cabinet chaired by Prime Minister Narendra Modi has approved the long-awaited Research Development and Innovation (RDI) Scheme with a staggering outlay of ₹1 lakh crore. The scheme is poised to redefine India’s innovation, research, and technology ecosystem by providing long-term, affordable financing to the private sector — enabling the nation to stake its claim as a global innovation and product powerhouse by 2047.

The RDI Scheme has been carefully structured to address one of India’s long-standing challenges: the lack of private-sector-led investment in high-impact research and innovation. By offering low or nil-interest, long-tenure loans and risk capital, the scheme directly incentivizes the private sector to invest in sunrise domains and strategic sectors that are critical for India’s economic and technological sovereignty.

According to the government’s official statement, the scheme will:

✅ Encourage private-sector innovation in sunrise sectors with strategic importance
✅ Support technology acquisition of high strategic relevance
✅ Finance transformative projects up to higher levels of Technology Readiness (TRL)
✅ Facilitate a Deep-Tech Fund of Funds to build a robust technology venture ecosystem

The RDI Scheme’s governance structure will be anchored by the Anusandhan National Research Foundation (ANRF), with its Governing Board chaired by the Hon’ble Prime Minister. The scheme will be implemented through the Department of Science and Technology (DST), with oversight by an Empowered Group of Secretaries led by the Cabinet Secretary — ensuring that the program stays mission-aligned and results-focused.

Industry Leaders Applaud a Landmark Reform

Industry captains and technology pioneers have welcomed this path-breaking step as a historic opportunity for India’s R&D landscape.

Ashok Chandak, President of IESA and SEMI India, described the scheme as a landmark step in India’s journey toward becoming a global innovation hub.

“By unlocking ₹1 lakh crore of long-term capital for sunrise and strategic sectors, this initiative will catalyze private-sector-led innovation in areas critical to India’s economic and technological sovereignty — including semiconductors, deep-tech, and electronics,” Chandak stated.

He highlighted that IESA has already started collaborating with the ANRF, DST, and MeitY to advance the RDI mission. According to Chandak, IESA will play a proactive role by:

• Implementing identified high-impact R&D opportunities in semiconductors, electronic systems, and embedded technologies

• Facilitating collaboration between startups, academia, and industry to accelerate technology readiness

• Enabling industry sponsorships and funding high-impact R&D projects

• Supporting commercialization pipelines and deep-tech venture growth

“The RDI scheme has the potential to transform India’s innovation landscape — and IESA is committed to being a strategic enabler in this journey,” Chandak affirmed.

Translational Research to Power a Product Nation

Dr. Ajai Chowdhry, Founder of HCL and Chairman of the EPIC Foundation, hailed the Cabinet’s decision as a crucial milestone to fulfill India’s Viksit Bharat 2047 aspirations:

“This initiative will be a crucial step towards achieving technology sovereignty and realising the vision of Viksit Bharat by 2047. I warmly welcome the Union Cabinet's approval of the Research Development and Innovation (RDI) Scheme with a substantial outlay of ₹1 lakh crore, a milestone I've eagerly anticipated for the past 2-3 years,” he said.

Dr. Chowdhry candidly noted India’s chronic underinvestment in R&D, which has hovered around 0.64% of GDP — far lower than the 2–5% allocated by developed innovation economies such as the US, Japan, and China.

He stressed that the RDI Scheme rightly shifts the burden to private industry to lead translational research. Under ANRF, education and research institutions typically advance technologies up to TRL-4; private players — both corporates and startups — can now scale those innovations to TRL-9, ready for global markets.

“Covid-19 catapulted us to the top league of connected nations. We made the right choices and the world watched us do that. Recently, Operation Sindoor has taught us another valuable lesson: we need belief in our own capabilities, invest in secure and indigenous infrastructure, become a product nation, and lead with conviction, not dependency,” Dr. Chowdhry added.

He underscored that placing the scheme under DST, with the Prime Minister personally chairing the ANRF’s Governing Board, sends a powerful policy signal of India’s unwavering commitment to homegrown, secure, and scalable innovation.

A Two-Tiered Engine for Innovation

The ₹1 lakh crore RDI scheme is designed with a unique two-tiered funding mechanism. A Special Purpose Fund (SPF) will act as the custodian of funds within ANRF. From there, a network of second-level fund managers will be empowered to allocate resources through concessional loans, equity investments, and contributions to deep-tech funds of funds.

The innovation ecosystem — including startups, MSMEs, and established tech corporates — is expected to see a significant uptick in access to growth capital and risk finance, which historically has been a major bottleneck for Indian R&D and product innovation.

Exclusive Analysis

From an MSME and startup lens, the RDI scheme is more than just a large allocation of funds — it is a strategic policy instrument that could finally help India cross the innovation chasm. While public-funded research has created strong academic outputs, the translation of these outputs into market-ready, globally scalable products has been minimal. The scheme’s explicit emphasis on concessional, long-term financing — especially for higher TRL stages — addresses this missing link.

In SMEStreet’s view, the real litmus test of the RDI scheme will lie in its execution and its ability to break silos between academia, startups, and large corporates. India’s MSMEs, which often lack the resources to take even promising prototypes to commercial scale, will have a once-in-a-generation chance to integrate with national R&D priorities through this framework.

Further, by encouraging equity-based funding and Deep-Tech Funds of Funds, the scheme has the potential to correct India’s chronic shortage of risk capital, which has stifled ambitious projects in areas like defence electronics, advanced manufacturing, and semiconductor supply chains.

However, successful rollout will depend on:

• transparent governance

• minimal bureaucratic hurdles

• quick approvals

• and industry-aligned funding models

The government’s decision to house the scheme within DST, guided by the ANRF under the PM’s direct leadership, gives it a strong institutional backbone. But sustaining momentum over the next decade will require constant course corrections and deep collaboration with private players.

If these conditions are met, the RDI scheme could do for India’s innovation sector what the PLI scheme did for its manufacturing backbone — transform the nation from an implementer of other people’s ideas to a true creator of next-generation technologies.

As India marches toward its Viksit Bharat 2047 vision, the SMEStreet editorial board believes this scheme could be the single most important catalyst for building a self-reliant, product-driven, and globally competitive India.