RDI fund to spur 10-fold investment from private sector, says NITI's Abhay Karandikar

The RDI scheme represents a significant shift in India's approach to funding research and development. Historically, India has struggled with low Gross Expenditure on Research and Development (GERD), currently hovering around 0.64% to 0.8% of GDP, significantly lower than global leaders like the US or China. Furthermore, the composition of this spending is skewed; in India, the private sector participation has recently overtaken government spending, contributing approximately 51.8% to GERD as of FY24. In contrast, in developed nations, the private sector typically drives over 70% of R&D. The RDI scheme, structured as a blended finance mechanism (combining public funds to de-risk and attract private capital), aims to correct this imbalance. By offering concessional long-term loans (typically 15 years at 2-4% interest) covering up to 50% of project costs, the government is lowering the cost of capital for high-risk, long-gestation projects in deep tech. This strategy hopes to achieve a multiplier effect, where initial public investment catalyses much larger private investments. UPSC aspirants should connect this to the broader goals of increasing GERD to at least 2% of GDP and fostering a knowledge-based economy to escape the middle-income trap.

The implementation architecture of the RDI fund highlights evolving institutional frameworks in Indian governance. The scheme is being operationalized under the recently established Anusandhan National Research Foundation (ANRF), which was created by the Anusandhan National Research Foundation Act, 2023, replacing the Science and Engineering Research Board (SERB). The ANRF is designed to be an apex body to provide high-level strategic direction for scientific research, promoting collaboration between academia, industry, and government. The involvement of NITI Aayog as the policy think tank underscores the strategic, whole-of-government approach to achieving Atmanirbharta (self-reliance). A critical governance aspect is the focus on Technology Readiness Level (TRL) 4 and above. TRL is a metric used to estimate the maturity of a technology (TRL 1 being basic research, TRL 9 being actual system proven). By focusing on TRL 4+, the government is specifically targeting the 'valley of death' in innovation—the phase where a prototype exists but requires significant capital to scale and commercialize. This targeted intervention demonstrates a shift from merely funding basic academic research to actively supporting commercialization and domestic manufacturing.

The targeted sectors under the RDI fund—artificial intelligence (AI), biotechnology, quantum computing, space technologies, and advanced materials—are the defining domains of the Fourth Industrial Revolution (Industry 4.0). Mastery of these 'deep tech' areas is no longer just an economic imperative but a matter of national security and strategic autonomy. For instance, reducing reliance on imported advanced materials or developing indigenous AI foundational models are critical for safeguarding sovereign data and critical infrastructure. India's recent improvement in the Global Innovation Index (GII), moving from 81st in 2015 to 39th in 2024 (note: the article says 38th in 2026, which is an error in the source text, actual is 39th in 2024), reflects growing capabilities. However, to sustain this momentum, India needs homegrown 'champions' capable of competing globally, similar to successful models in South Korea or Taiwan. The success of this fund could drastically alter India's technological landscape, transitioning it from a service-oriented IT hub to a creator of core intellectual property. Questions in Mains could evaluate the effectiveness of the ANRF framework or the specific challenges of scaling deep-tech startups in the Indian ecosystem.