Cabinet Approves Research Development and Innovation (RDI) Scheme

Cabinet Approves Research Development and Innovation (RDI) Scheme

Why in News? 

Recently, the Indian government approved the ₹1 lakh crore Research Development and Innovation (RDI) scheme to boost deep-tech and strategic research. The scheme will support priority sectors through public funding and national self-reliance.

What is Cabinet Approves Research Development and Innovation (RDI) Scheme?

• Introduction:

• • • The RDI Scheme is a flagship initiative approved by the Union Cabinet on 1 July 2025, with a funding corpus of ₹1 lakh crore. 
    • Its goal is to boost innovation by enabling private sector participation across strategic and emerging sectors. 

• Objectives:

• • • Encourage private sector R&D in areas vital for economic security, strategic autonomy, and self-reliance.
    • Finance high-TRL projects—those nearing market-readiness—across sunrise sectors.
    • Support acquisition of critical technologies to close gaps in India’s technological capabilities.
    • Establish a Deep-Tech Fund of Funds to unlock capital for startups and scale-ups in frontier technologies.
    • Projects at advanced Technology Readiness Levels (TRLs) will be prioritised to accelerate market entry and scaling.

• Execution:

• • • The Anusandhan National Research Foundation (ANRF) will oversee the scheme.
    • Its Governing Board, chaired by the Prime Minister, sets overall strategy.
    • The Executive Council (EC) of ANRF finalizes guidelines and recommends fund managers and sector focus.
    • An Empowered Group of Secretaries (EGoS), led by the Cabinet Secretary, reviews performance, approves changes, and selects second-level fund managers.
    • The Department of Science and Technology (DST) will serve as the operational nodal agency.

• Funding Structure:

• • The funding employs a two-tiered model administered through the ANRF.
    • First Tier: A Special Purpose Fund (SPF) within ANRF serves as the custodian of resources..
    • Second Tier: Funds flow to designated fund managers who provide:
      • Concessional long-term loans at low or zero interest, ideal for scaling firms.

• Equity investments for startups with high growth potential.
• Contributions to Deep-Tech Fund of Funds or similar multi-sector investment pools

• The RDI Scheme was first announced in the 2024–25 Interim Budget with an initial corpus, followed by allocation of ₹20,000 crore in Budget 2025–26.

Highlights of India’s RDI Ecosystem

• Private Sector-Driven R&D Acceleration: India traditionally spends only ~0.65% of its GDP on R&D, which trails key competitors like China (~2.4%) and South Korea (~4–5%). 

• • • India’s Gross Expenditure on R&D almost doubled from ₹60,197 crore (2010–11) to ₹1,27,381 crore (2020–21).
    • Government agencies like CSIR, DRDO, ICAR, DAE, and DST jointly lead more than 54% of this investment.

• Startup Ecosystem: India now ranks 3rd globally in research output (>3 lakh research papers in 2022) and 6th in patent grants (~30,490 in 2022). 

• • Over 120,000 startups—with support from Startup India, AIM, CIIE.CO incubators, and Atal Tinkering Labs—fuel deep-tech innovation.
  • DST has established mission hubs in quantum, cyber-physical systems, climate and health technologies, supporting more than 600 startups.
• Policy: ANRF Act, 2023 and RDI Scheme lay groundwork for ₹1 lakh crore and anchor government‑industry research synergy.
  • Budget 2025’s ₹500 crore for AI Centres of Excellence and India AI Mission strengthen frontier-tech capabilities.

Challenges Facing India’s RDI Ecosystem

• Underinvestment: India’s private firms account for only ~36–37 % of total R&D spending, compared to over 70 % in countries like China, the US, Japan, and South Korea. This imbalance slows innovation, as firms avoid investment due to uncertain returns and weak commercialization structures.

• Weak Innovation: Less than 1 % of India’s ~40,000 universities engage in high-quality research. Institutes like IISc, IITs, and IISERs face procurement delays and restrictive funding mechanisms that stifle efficiency. The lack of advanced labs, semiconductor fabs, and R&D equipment hampers both basic and applied research.

• Talent Gaps: India has only ~255 FTE researchers per million, compared to ~4,600 in the US. A substantial portion of talented scientists are migrating abroad due to better infrastructure and rewards. This “brain drain” leaves domestic institutes under-resourced and understaffed.

• Academia–Industry Disconnect: Only about 10–27 % of startups or higher education institutions collaborate with industry on R&D. Research is often theoretical, with limited focus on applied or translational projects that lead to products. Policy fragmentation across ministries further complicates technology transfer.

Government Initiatives to Boost India’s RD Innovation Ecosystem

• Anusandhan National Research Foundation (ANRF): The ANRF Act, 2023, established the apex body to oversee research strategy, replacing the Science and Engineering Research Board (SERB). ANRF manages a ₹50,000 crore budget (2023–28), with ₹14,000 crore from the public sector and ₹36,000 crore sourced from industry and philanthropy. It connects universities, labs, and industry through hub-and-spoke partnerships.

• PAIR Programme for Collaborative Research: ANRF-led PAIR (Partnerships for Accelerated Innovation and Research) grants include a ₹100 crore award to IIT Indore and six partner institutions. The program supports interdisciplinary focus in sustainability, healthcare, materials science, and advanced manufacturing.

• • One Nation One Subscription (ONOS): This scheme provides researchers at over 6,300 government colleges, universities, and R&D centers access to 12,000+ international journals for three years with a ₹6,000 crore budget. It is aligned with NEP 2020 and ANRF goals to democratize research information.

• Strategic Infrastructure Programs: ANRF coordinates mission-focused projects in areas like EV technology, advanced materials, AI‑for‑Science, space-tech and small-business deep‑tech innovation. It enables sharing of scientific equipment via a “Cloud of Research Infrastructure”, improving access to high-end labs.

Recommendations to Boost India’s RDI Ecosystem 

• Increase R&D Intensity: Encouraging firms to commit to multi-year R&D roadmaps will shift focus from short-term fiscal cycles to long-term innovation. State governments should establish innovation grants tied to performance milestones in key sectors.

• Strengthen Innovation: The “Cloud of Research Infrastructure” must be extended to 10,000+ shared labs and equipment centers. State Innovation Councils should coordinate with ANRF to standardize access, pricing, and maintenance across regions. 

• Enhance Talent Generation: India should enhance research careers through higher pay, flexible grants, and tenure-track pathways in universities and labs. Introduce 1,000 “Early Career Research Fellowships” (₹30 lakh/year) and 500 “National Professorships” (₹2 Cr/5 years), especially targeting young scientists.
• Simplify Regulations: Deutsche research labs note that India underutilized 30–40 % of its annual science grants due to slow approvals. India must recruit 5,000 new patent examiners and digitize workflows to reduce pendency. GST and customs duties currently apply to critical lab equipment. Apply a full tax exemption roll-out for strategic R&D tools.