Explainer - Research, Development and Innovation (RDI) Fund scheme

• Prime Minister Narendra Modi announced the launch of Rs one lakh crore Research, Development and Innovation (RDI) Fund scheme to promote private sector investments in research and development.

• He launched the scheme at the first ever Emerging Science Technology and Innovation Conclave (ESTIC) at Bharat Mandapam in New Delhi on November 3.

RDI Fund scheme

• On July 1, the Union Cabinet approved the Research Development and Innovation (RDI) Fund scheme with a corpus of Rs one lakh crore.

• This initiative aims to catalyse private sector participation in high-impact R&D.

• It aims to strengthen India’s capabilities in strategic technologies and promote technological self-reliance.

• It will provide long-term financing or refinancing with long tenors at low or nil interest rates to spur private sector investment in RDI. 

• The scheme has been designed to overcome the constraints and challenges in funding of the private sector and seeks to provide growth and risk capital to sunrise and strategic sectors to facilitate innovation, promote adoption of technology and enhance competitiveness.

Key objectives of the RDI Scheme:

i) Encouraging Private Sector Involvement: Incentivise active participation from industry players in cutting-edge research and innovation.

ii) Promoting Strategic Technologies: Focus on mission-critical areas that are vital for national development and global competitiveness, including:

• Energy security and transition, and climate action.

• ‘Deep technologies’ including quantum computing, robotics and space.

• Artificial intelligence and its applications to Indian problems including in agriculture, health, and education.

• Biotechnology, biomanufacturing, synthetic biology, pharma, and medical devices.

• Digital economy including digital agriculture.

iii) Fostering Self-Reliance and Economic Security: Support technologies where indigenisation is essential for strategic or economic reasons.

iv) Ensure Flexibility in Sectoral Support: Allow support for any additional sectors or technologies deemed essential for public interest.

• The Department of Science and Technology (DST) is the nodal ministry of the RDI Fund that will operate through a two-tiered funding structure. 

• At the first level, a Special Purpose Fund (SPF) will be established within the Anusandhan National Research Foundation (ANRF), which will serve as the custodian of the Rs one lakh crore corpus. 

• The Fund will not directly invest in industries and startups but will channel capital to second-level fund managers, who can be Alternative Investment Funds (AIF), Development Finance Institutions (DFI), Non-banking Finance Companies (NBFCs), among others. 

• Recommendations for support will be made by second-level fund managers through investment committees comprising experts from financial, business, and technical domains operating at arm’s length from the government.