PM Modi launches ₹1 trillion fund to boost private R&D
What's the story
Prime Minister Narendra Modi has launched a ₹1 lakh crore Research, Development and Innovation (RDI) Fund. The initiative is aimed at promoting private sector investment in research and development. The fund will work through a two-tiered structure, channeling capital to second-level fund managers. This move is expected to drive innovation and support India's Viksit Bharat 2047 vision.
Operational structure
Who will manage the fund?
The Department of Science and Technology (DST) will be the nodal ministry for the RDI Fund. It will work through a two-tiered funding structure. At first, a Special Purpose Fund (SPF) will be set up within the Anusandhan National Research Foundation (ANRF). This fund will hold the ₹1 lakh crore corpus as its custodian.
Investment strategy
How will the fund work?
The RDI Fund won't invest directly in industries and start-ups. Instead, it will channel capital to second-level fund managers, which could be Alternative Investment Funds (AIF), Development Finance Institutions (DFI), or Non-banking Finance Companies (NBFCs). Recommendations for support will be made by these managers through investment committees comprising experts from financial, business and technical domains operating independently from the government.
Funding focus
What projects will be supported?
The RDI Fund will support long-term, low-interest loans to corporates or equity contributions in start-ups. Projects must focus on cutting-edge R&D in areas like energy, biotechnology, medical devices, deep tech or artificial intelligence. There is no upper limit on the investment amount and large companies can also apply as long as they contribute 50% of the project cost themselves.
Funding impact
Why is this initiative important?
The RDI Fund aims to bridge the gap in private sector R&D spending in India. Currently, private investment accounts for only 30-35% of total R&D expenditure, compared to around 70% in advanced economies. By providing patient capital and reducing risk for early-stage investments, the fund hopes to fix this imbalance.