India Cabinet approves Research Development and Innovation (RDI) Scheme with ₹1 lakh crore outlay for private-sector R&D

Mechanism

The RDI Scheme is India's answer to the private-sector R&D-intensity gap: India's gross expenditure on R&D sits near 0.65% of GDP, well below China (~2.4%) and the US (~3.5%), with the private sector historically supplying a much smaller share of that spend than in peer economies. Rather than grant funding, the scheme is structured as a revolving financing instrument:

1. ₹1,00,000 crore six-year envelope, ₹20,000 crore committed for FY2025-26 — the largest dedicated private-sector RDI financing pool India has run. 2. Two-tier fund-manager architecture — ANRF's Special Purpose Fund (first level) channels capital to second-level managers (AIFs, DFIs, NBFCs, TDB, BIRAC), who underwrite individual projects. TDB and BIRAC opened their first calls for proposals in February 2026. 3. Instrument mix restricted to long-tenor low/nil-interest debt and equity (up to 50% of assessed project cost for TRL ≥4 projects) — grants and short-term loans are explicitly excluded, distinguishing this from India's PLI-style direct-subsidy schemes. 4. Governance — ANRF's Governing Board, chaired by the Prime Minister, sets strategic direction; an Empowered Group of Secretaries can approve exceptions to standard financing terms.

Downstream implications

• **Deep-tech and AI-adjacent listed/startup ecosystem gets a financing

backstop.** Long-tenor low-interest debt at up to 50% of project cost materially changes the risk-adjusted return profile for private R&D in quantum, robotics, space and biotech — sectors that previously relied on VC equity or foreign JV capital.

• Complements, rather than duplicates, PLI/Semicon India-style schemes.

RDI targets pre-commercialisation R&D (TRL 4+) rather than manufacturing capacity, positioning it upstream of India's existing PLI industrial- policy stack (semiconductors, batteries, electronics).

• TDB/BIRAC become significant deal originators for private RDI capital

— worth tracking their FY26 call-for-proposals cohorts as a leading indicator of where Indian deep-tech capex concentrates.

Open questions

• How much of the ₹20,000 crore FY25-26 allocation will actually be

disbursed vs. committed-but-unspent, given India's historical lag between budgeted and executed R&D spend?

• Will private-sector R&D intensity (currently well below OECD peers)

measurably rise, or will the fund mainly finance projects that would have proceeded anyway?

• How does the ANRF SPF's equity-investment mandate interact with existing

government venture vehicles (e.g., Fund of Funds for Startups, SIDBI)?