Fuelling India's Innovation Engine: Why The RDI Scheme Could Be A Game-Changer | OPINION

With a ₹1 lakh-crore commitment, the Modi government's Research, Development and Innovation (RDI) scheme is a long-overdue push to make the private sector a serious player in strategic and sunrise technology domains. The Union Cabinet, led by Prime Minister Narendra Modi, on July 1 approved the Research, Development and Innovation (RDI) Scheme, committing ₹1 lakh crore to stimulate India's innovation ecosystem.

It's more than just a financial package; it is a strategic bet on India's future. With this, the government has taken a decisive step to reshape the country's approach to research and innovation by placing the private sector at the heart of it.

What The RDI Aims To Achieve

The scheme encourages the private sector to scale up investments in research and development, especially in sunrise sectors. These could be nascent today but poised to dominate the global economy in the coming decades—and in strategic domains critical to national security and economic self-reliance. These sectors include areas like quantum technologies, artificial intelligence, space tech, semiconductors, green hydrogen, electric mobility, and advanced materials—spaces where global competition is heating up and where India cannot afford to lag.

For decades, India's research ecosystem has been heavily dominated by public institutions like the Council of Scientific and Industrial Research (CSIR), Defence Research and Development Organisation (DRDO), and Indian Space Research Organisation (ISRO). While they have delivered path-breaking work, the absence of private capital and enterprise has meant a weak link between lab innovations and commercial application. The RDI Scheme could change that by providing long-term concessional loans or even equity funding to private players, including startups.

How Private Industry Can Leverage RDI

More importantly, this scheme is not just about money. It's about risk capital—a type of funding that's crucial when you're dealing with technologies that are experimental, untested, or yet to reach commercial maturity. India's private sector has historically shied away from R&D due to high risks and uncertain returns. The RDI Scheme directly addresses this by offering low or zero interest rates and patient capital to allow private players to take bolder bets.

The architecture of the scheme is also carefully calibrated to ensure both strategic oversight and operational flexibility. The Anusandhan National Research Foundation (ANRF), chaired by the Prime Minister, will provide the overarching strategic direction. The Department of Science and Technology (DST) will serve as the nodal department, with an Empowered Group of Secretaries (EGoS) overseeing its implementation. This blend of political will, bureaucratic coordination, and technocratic execution gives the scheme a fighting chance of succeeding where earlier initiatives floundered.

There's also an intelligent two-tiered funding structure. At the top, a Special Purpose Fund (SPF) within ANRF will act as the principal custodian. From there, money will flow to second-level fund managers, who can deploy it flexibly—whether as concessional loans to large firms or equity investments into high-risk, high-reward startups. Crucially, the scheme also supports the creation of a Deep-Tech Fund of Funds, acknowledging that India must build its venture capital ecosystem tailored to the demands of frontier technologies.

Why RDI Is Crucial In India's Growth Story 

From a policy perspective, the RDI Scheme could be a pivotal move toward correcting a longstanding anomaly: India spends less than 0.7% of its GDP on R&D. This leaves India far behind global leaders like South Korea (4.8%), Israel (5.6%), or even China (2.4%). What's worse, over 55% of that spending comes from the government. In contrast, in advanced economies, it is the private sector that leads in innovation. If implemented effectively, the RDI Scheme can help India reverse this trend and finally push private R&D investment toward the levels needed for a technologically self-reliant and globally competitive Bharat.

RDI Scheme Execution Roadmap

However, the success of the RDI Scheme will depend on three key factors:

Targeted Execution: The scheme must prioritise high-TRL (Technology Readiness Level) projects that are close to commercialisation but held back by funding gaps. Scattershot funding will dilute impact.

Robust Governance: With multiple institutions involved—ANRF, DST, and EGoS—coordination and transparency will be critical. Avoiding bureaucratic delays and ensuring the timely disbursement of funds must be non-negotiable.

Focus on Outcomes, Not Inputs: The scheme should move away from a culture of grantsmanship. Instead, performance metrics such as patents filed, technologies commercialised, jobs created, or exports achieved should define success.

Moreover, the scheme must actively nurture India's deep-tech startup ecosystem, which is still in its infancy compared to Silicon Valley or Beijing. With strategic handholding through both capital and mentoring, these startups could become national champions in AI chips, quantum hardware, and biotech.

One also cannot overlook the geopolitical relevance of the RDI Scheme. In an increasingly polarised world, technological sovereignty is the new currency of power. The US-China tech rivalry, sanctions on semiconductor exports, and AI regulation debates all underscore that India must build indigenous capacities to avoid dependence on foreign tech ecosystems. In this context, the RDI Scheme is not merely an economic policy; it is strategic statecraft.

As India aspires to become a developed nation by 2047, investments like these are essential to create the knowledge economy of the future. The global economy is shifting from capital and labor to intellectual property and innovation. The RDI Scheme could be the keystone that enables India to not just participate in but lead this new era.

In sum, the RDI Scheme represents a much-needed correction in India's innovation journey—from a state-driven, grant-heavy model to a public-private partnership anchored in strategic vision and market logic. If implemented earnestly, it may well be remembered as the spark that lit India's innovation revolution.

Viksit Bharat by 2047 isn't just a slogan; it's a technological mission. The RDI Scheme may be its most vital roadmap.

(The writer is a technocrat, political analyst, and author)

[Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP Network Pvt. Ltd.]

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