The Union Cabinet, chaired by PM Narendra Modi, approved the Research, Development and Innovation (RDI) Scheme on July 1, 2025, with a ₹1 lakh crore corpus over six years. The scheme provides long-term, low-cost financing to spur private sector investment in sunrise domains and deep-tech sectors. The Department of Science and Technology (DST) acts as the nodal agency, implementing a two-tiered funding mechanism via the Anusandhan National Research Foundation (ANRF). This initiative aims to enhance India's global competitiveness by commercialising technologies at Technology Readiness Level (TRL) 4 and above.
On July 1, 2025, the Union Cabinet approved the comprehensive Research, Development and Innovation (RDI) Scheme, backed by a monumental ₹1 lakh crore corpus. Officially launched by the Prime Minister in November 2025, the initiative seeks to solve the chronic lack of private R&D funding in India. It does this by offering long-tenor financing at extremely low or nil interest rates to private enterprises working on advanced technologies.
The policy framework was formulated and approved in New Delhi by the Cabinet in July 2025, with a national launch in November 2025. The scheme has a pan-India operational footprint, specifically targeting domestic technology hubs, research parks, incubators, and corporate R&D centres over its six-year operational timeline.
1. Tier 1 Structuring: A Special Purpose Fund (SPF) is established within the ANRF to securely hold the central ₹1 lakh crore corpus.
2. Tier 2 Allocation: The SPF channels these funds down to Second Level Fund Managers (SLFMs) such as Alternative Investment Funds (AIFs), DFIs, TDB, and BIRAC.
3. Capital Disbursement: SLFMs evaluate private sector proposals and provide long-term concessional loans (or equity investments, particularly for startups).
4. Maturity Validation: Funding is exclusively granted to projects at Technology Readiness Level (TRL) 4 or above, ensuring the focus remains on commercialising viable products rather than basic theoretical science.
Historically, India's Gross Expenditure on R&D (GERD) has remained stagnant at roughly 0.65% of GDP. To overhaul the institutional framework, the Parliament passed the Anusandhan National Research Foundation (ANRF) Act in 2023. Realising that institutional change requires heavy capital backing, the Finance Minister first announced the intent to create a ₹1 lakh crore innovation corpus in the Interim Union Budget of 2024-25.
In terms of innovation financing, India's private sector currently contributes roughly 36% to overall R&D expenditure. In stark contrast, private sector contributions in the USA, South Korea, and China routinely exceed 70%. The RDI Scheme is a targeted structural intervention designed to bridge this massive global disparity.
Core Concept: Anusandhan National Research Foundation (ANRF)
Q1. Which entity serves as the nodal department for the implementation of the ₹1 lakh crore RDI Scheme? [Easy]
A) Ministry of Electronics and Information Technology
B) NITI Aayog
C) Department of Science and Technology
D) Department of Economic Affairs
Answer: C
Explanation: The Department of Science and Technology (DST) is officially designated as the nodal department for implementing the RDI Scheme.
Q2. Who chairs the Governing Board of the Anusandhan National Research Foundation (ANRF) that provides strategic direction to the RDI Scheme? [Easy]
A) Minister of Science and Technology
B) Prime Minister of India
C) Cabinet Secretary
D) Principal Scientific Advisor
Answer: B
Explanation: The Governing Board of ANRF is chaired by the Prime Minister, granting it top-level executive authority.
Q3. The RDI Scheme focuses on financing transformative projects starting at which minimum Technology Readiness Level (TRL)? [Moderate]
A) TRL 1
B) TRL 2
C) TRL 4
D) TRL 8
Answer: C
Explanation: The scheme exclusively targets projects at TRL 4 and above to ensure the focus is on commercialisation rather than basic lab research.
Q4. Under the RDI Scheme's two-tiered funding mechanism, which of the following acts as the custodian of funds at the first level? [Moderate]
A) Technology Development Board (TDB)
B) Reserve Bank of India (RBI)
C) Special Purpose Fund (SPF) within ANRF
D) Biotechnology Industry Research Assistance Council (BIRAC)
Answer: C
Explanation: A Special Purpose Fund (SPF) established directly within the ANRF acts as the primary tier-one custodian of the central funds.
Q5. Which group is responsible for approving scheme changes, sectors, and reviewing the overall performance of the RDI Scheme? [Moderate]
A) An Empowered Group of Secretaries (EGoS) led by the Cabinet Secretary
B) The Executive Council of ANRF
C) The Governing Board of NITI Aayog
D) The Parliamentary Standing Committee on Science
Answer: A
Explanation: An Empowered Group of Secretaries (EGoS) led by the Cabinet Secretary is explicitly responsible for approving changes and reviewing performance.
Q6. Consider the mechanism of the RDI Scheme. The Technology Development Board (TDB) and BIRAC function as which of the following under this framework? [Tricky]
A) First Level Custodians
B) Second Level Fund Managers (SLFMs)
C) Nodal Implementation Departments
D) Deep-Tech Fund Regulators
Answer: B
Explanation: TDB and BIRAC operate as Second Level Fund Managers (SLFMs) that disburse the actual loans or equity directly to private entities.
Q7. Which of the following is NOT one of the primary objectives of the RDI Scheme approved in July 2025? [Tricky]
A) Providing high-interest short-term loans to foreign tech startups
B) Facilitating the setting up of a Deep-Tech Fund of Funds
C) Supporting the acquisition of strategically important technologies
D) Encouraging private sector R&D in sunrise domains
Answer: A
Explanation: The scheme provides long-term financing at low or nil interest rates for indigenous innovation, not high-interest loans for foreign entities.
Q8. In the context of the RDI Scheme, the Anusandhan National Research Foundation (ANRF) replaced which pre-existing statutory body? [Tricky]
A) Council of Scientific and Industrial Research (CSIR)
B) Indian Council of Medical Research (ICMR)
C) Science and Engineering Research Board (SERB)
D) Technology Information, Forecasting and Assessment Council (TIFAC)
Answer: C
Explanation: The ANRF Act of 2023 officially repealed and subsumed the Science and Engineering Research Board (SERB) created in 2008.
PYQ 1:
What is the primary purpose of the Special Purpose Fund (SPF) created under the Anusandhan National Research Foundation (ANRF)?
A) To manage international climate finance grants
B) To act as the custodian of funds for the RDI Scheme
C) To regulate foreign direct investment in deep-tech sectors
D) To fund basic primary education in rural areas
Answer: B
Explanation: The SPF established within the ANRF acts as the tier-one custodian of the ₹1 lakh crore corpus for the RDI Scheme.
PYQ 2:
Consider the following statements regarding the Research, Development and Innovation (RDI) Scheme:
1. It provides a corpus of ₹1 lakh crore spread over ten years.
2. It aims to provide long-tenor financing at low or nil interest rates to the private sector.
3. It limits its funding strictly to government-owned research laboratories.
Which of the above statements is/are correct?
A) 1 and 2 only
B) 2 only
C) 2 and 3 only
D) 1, 2 and 3
Answer: B
Explanation: Statement 1 is incorrect (it is over six years, not ten). Statement 3 is incorrect (it specifically targets private sector investment). Only Statement 2 is correct.
PYQ 3:
Assertion (A): The RDI Scheme mandates that projects must be at Technology Readiness Level (TRL) 4 and above to receive funding.
Reason (R): The primary objective of the scheme is to promote basic theoretical research in universities rather than technology commercialisation.
Answer: C
Explanation: A is true, but R is false because targeting TRL 4 explicitly means the scheme is focused on technology commercialisation and applied innovation, not basic academic research (which corresponds to TRL 1-3).
Question 1 (150 words): Analyze the significance of the Research, Development and Innovation (RDI) Scheme in bridging the financing gap for deep-tech startups in India.
The Research, Development and Innovation (RDI) Scheme, backed by a ₹1 lakh crore corpus over six years, marks a watershed moment in addressing the chronic underfunding of India's private R&D ecosystem. Deep-tech startups, operating in sectors like quantum computing and robotics, inherently require long gestation periods and high risk-capital that traditional commercial banks hesitate to provide.
By offering long-tenor financing at low or nil interest rates through a two-tiered mechanism managed by the ANRF, the scheme effectively absorbs early-stage commercialisation risks. Furthermore, the explicit provision to facilitate a Deep-Tech Fund of Funds directly targets the equity and risk capital needs of these emerging startups.
Crucially, the mandate to fund projects at Technology Readiness Level (TRL) 4 and above ensures that capital is channelled toward scalable, market-ready innovations rather than theoretical research. Ultimately, this structural intervention will reduce India's reliance on imported critical technologies, driving the Atmanirbhar Bharat vision forward.
Question 2 (250 words): "Despite a massive demographic dividend, India's Gross Expenditure on R&D (GERD) has stagnated, primarily due to poor private sector participation." Discuss how the Anusandhan National Research Foundation (ANRF) and the recent RDI Scheme seek to resolve this structural bottleneck.
India's Gross Expenditure on R&D (GERD) has alarmingly stagnated at around 0.65% of its GDP for over a decade, lagging significantly behind global innovators like the USA, South Korea, and China. A major structural bottleneck is that the Indian private sector contributes only about 36% to this R&D expenditure, compared to over 70% in developed nations. The Anusandhan National Research Foundation (ANRF) and the newly approved ₹1 lakh crore Research, Development and Innovation (RDI) Scheme aim to aggressively correct this structural imbalance.
Historically, the lack of affordable, long-term risk capital deterred Indian industries from investing in high-risk, high-reward deep technologies. The RDI Scheme resolves this by establishing a Special Purpose Fund (SPF) under the ANRF, which channels funds through Second Level Fund Managers (SLFMs) like the Technology Development Board (TDB). This mechanism offers private entities long-tenor loans at low or nil interest rates, fundamentally lowering the barrier to innovation capital.
Politically and economically, this architecture shifts the government's role from a primary researcher to a strategic enabler of private enterprise. By mandating that funding goes to projects at Technology Readiness Level (TRL) 4 and above, the scheme specifically bridges the "valley of death" between laboratory prototypes and commercial products.
Internationally, as global supply chains in AI, semiconductors, and space technologies become highly weaponised, domestic self-reliance is a national security imperative. Moving forward, the swift operationalisation of the Deep-Tech Fund of Funds and seamless coordination among SLFMs will dictate the success of India's leap toward a globally competitive, innovation-led economy.
For Prelims, examiners will heavily target the institutional setup: remember that the PM chairs the ANRF Governing Board, DST is the nodal ministry, and TRL 4 is the baseline requirement. For Mains (GS Paper 3), use this ₹1 lakh crore scheme as your primary case study when discussing structural reforms in India's science and tech policy, private investment deficits, or Atmanirbhar Bharat. In Interviews, expect questions on why the private sector has historically ignored R&D in India and how low-interest loans can solve this. High-probability prediction: A direct Prelims MCQ asking to identify the statutory body that the ANRF replaced (SERB).