The Union Cabinet on Tuesday cleared a scheme with a corpus of ₹1 lakh crore to channel funding to the private sector for accelerating research, development, and innovation in sunrise and strategic sectors in the country.
The Research Development and Innovation (RDI) scheme, shaped through wide consultations with industry experts, will provide long-term financing or refinancing at low or interest-free rates . It will back projects that have moved beyond early-stage research and reached the prototype stage,said union minister Ashwini Vaishnaw at a press briefing on the cabinet’s decisions.
“When a company moves beyond the prototype stage, it often faces the ‘valley of death,’ a critical phase where many innovations fail due to lack of support,” said Vaishnaw. “This is exactly when timely assistance is needed to turn a promising prototype into a viable product.”
The scheme will target sunrise sectors such as clean energy, climate tech, deep tech (quantum applications, robotics, space teach), AI in key areas, biotech, digital agriculture, and also interestingly technologies required for strategic reasons, economic security, self-reliance or public interest.
“Countries that invest heavily in R&D see long-term gains in productivity and technological advancement across industries,” said Vaishnaw.
{{/usCountry}}“Countries that invest heavily in R&D see long-term gains in productivity and technological advancement across industries,” said Vaishnaw.
{{/usCountry}}The Economic Survey 2024-25 noted that even though India has increased the gross expenditure on research & development (GERD) from approximately ₹60,196 crore in 2011 to about ₹127,381 crore in 2021, it still is a mere 0.64% of its GDP. The survey noted that this remains “insufficient and remains low compared to many countries that have forged ahead in R&D.”
A Press Information Bureau release said the government will give ₹1 lakh crore to the Anusandhan National Research Foundation (ANRF) as a 50-year interest-free loan. ANRF, a government body set up to boost research and innovation, will create a special fund that offers concessional finance to second-level fund managers, who will then evaluate and select individual projects for funding. In some cases equity investments in startups may also be considered, the PIB release said.
Contributions to the Deep-Tech Fund of Funds, announced in Budget 2025, or any other fund of funds meant for RDI may also be considered, the release added.
The RDI scheme will be guided by the ANRF governing board, chaired by the prime minister. Its executive council will set guidelines and recommend fund managers and project types. A group of secretaries, led by the cabinet secretary, will approve changes and review progress. The secretary of the relevant sector will be included in the group. For instance, if a project involves AI, the secretary of the IT ministry will be part of the decision-making body. The department of science and technology will be the nodal agency for implementation.
Industry insiders described the scheme as transformative.
“DeepTech is the final frontier in the Indian Startup ecosystem. This ( ₹1 Lakh crore over 5 years) is a massive commitment from the Government of India to catalyze private sector R&D and deep tech innovation,” said Rajan Anandan, Managing Director at Peak XV Partners and former head of Google in India and Southeast Asia on X.
Nikhil Agarwal, managing director, foundation for innovation and technology transfer (FITT), IIT Delhi, said, “For the first time, our private sector has a real runway to dream bigger, build deeper, and compete globally. This move can transform India from a service-driven economy into a true innovation powerhouse. It’s a defining moment for our nation’s future.”
He pointed out that for young founders building in AI, space, biotech or semiconductors, access to R&D capital has always been the missing link. This scheme fills that gap, he said, calling it a structural reform that re-imagines how India competes globally.