When the government announced a ₹1 lakh crore fund to back India’s scientists, startups, and deep-tech entrepreneurs, it sounded like a turning point. The idea was simple and bold: if private investors won’t take big risks on frontier technology, let the government step in with patient money and bring them along.
Nearly a year after its formal launch, that promise is struggling to leave the runway. Of the ₹3,000 crore set aside for the current financial year, only ₹500 crore has actually been disbursed. And of the 162 investment funds that applied to take part, not one has received a letter of approval. So, let’s explore what the fund is, why it matters, where it has stalled, and what could fix it.
What is the RDI Fund?
The Research, Development and Innovation (RDI) Fund has a corpus of ₹1 lakh crore, to be deployed over six years. Its goal is to encourage private companies to invest in technologies that are expensive, uncertain, and slow to pay off, such as quantum computing, space technology, robotics, advanced batteries, biotechnology, and semiconductors.
Think of it this way. A software app can be built by two friends with laptops and launched in months. A new battery chemistry or a satellite component can take years and cost crores before it earns a rupee. Ordinary banks and venture investors tend to shy away from that kind of wait. The RDI Fund aims to fill that gap with long-term, low-interest or even zero-interest loans, and in some cases equity investment of up to 50% of a project’s cost.
The need is real. India spends only about 0.6 to 0.8 per cent of its GDP on research and development, far below the world’s technology leaders. Private companies have historically contributed a small share of that. The RDI Fund was meant to change this.
How the Money is Supposed to Flow
The scheme works through two layers, a bit like a water supply system with a main reservoir and local pipes.
At the top sits a Special Purpose Fund under the Anusandhan National Research Foundation (ANRF), which holds the money. From there, the funds go to ‘Second-Level Fund Managers’ or SLFMs. These are organisations such as the Technology Development Board (TDB), the Biotechnology Industry Research Assistance Council (BIRAC), private investment funds known as Alternative Investment Funds (AIFs), development finance institutions, and Focused Research Organisations (FROs).
The Research, Development and Innovation (RDI) Fund has a corpus of ₹1 lakh crore, to be deployed over six years, to encourage private companies to invest in technologies that are expensive, uncertain, and slow to pay off, such as quantum computing, space technology, robotics, advanced batteries, biotechnology, and semiconductors
These managers then pick promising companies and projects, specifically those at Technology Readiness Level 4 or above. In plain terms, that means the idea has already moved beyond the drawing board and has been tested at least in a laboratory. The managers lend or invest, and the innovators get to build.
The logic is sound. The Government sets the direction and provides the capital, while professional fund managers choose where it goes. The trouble lies in what has happened since.
The Numbers Tell the Story
The launch took place in November 2025. For the 2025-26 financial year, the budget estimate for the scheme was revised downward to ₹3,000 crore. Even that smaller figure proved hard to use, with only ₹500 crore disbursed by March 2026. That money went to the Technology Development Board, one of the first fund managers to be onboarded.
Here is a snapshot of where things stand:
- TDB and BIRAC were each sanctioned ₹1,000 crore.
- TDB has approved 22 projects with a total cost of ₹4,744 crore, of which the RDI Fund would support ₹2,192 crore.
- BIRAC has shortlisted eight projects involving about ₹390 crore.
- 162 AIFs and 38 Focused Research Organisations have applied, proposing commitments of around ₹8,000 crore.
- As of mid-2026, those applications were still under consideration, with no approval letters issued to the AIFs.
So, there is no shortage of interest. Money is waiting on the sidelines, projects are lining up, and investors are ready to commit. What is missing is the green light.
Why Things Have Stalled
Several problems are working together.
1. Slow Selection
Applications opened, presentations were made, and then months passed. Many venture funds raised money or planned new deep-tech funds assuming that RDI co-investment would be available. Without decisions, they are stuck. They cannot confidently close their own fundraising, which slows down private investment, the very thing the scheme was meant to speed up. Imagine planning a wedding, but the venue keeps delaying its confirmation. You cannot book caterers, send invitations, or fix dates. Everyone downstream waits.
The fund was launched in November 2025. For the 2025-26 financial year, the budget estimate for the scheme was revised downward to ₹3,000 crore. Even that smaller figure proved hard to use, with only ₹500 crore disbursed by March 2026
2. Layers of Bureaucracy
The system involves multiple evaluation stages, committee clearances, and reporting requirements. Some caution is healthy, since this is public money. Releasing funds in stages tied to milestones is a sensible way to manage risk. But when the approvals before the money even starts flowing take so long, the idea of ‘patient but timely’ capital falls apart. Patience is useful for the investor’s time horizon, not for the paperwork.
3. Questions About Fairness
Reports have raised concerns that a significant share of the first batch of TDB-backed projects had investment or professional links to members of the selection committee. Disclosures and recusals were formally recorded, but perception matters. When people suspect that insiders benefit, good fund managers and honest startups may hesitate to participate. Public trust is not a nicety here. It is what persuades private money to follow government money.
4. A Young Ecosystem
Deep-tech investing is hard. Evaluating a quantum sensor or a new semiconductor process requires specialised technical knowledge, not just financial skill. India’s venture capital community has spent the past decade getting comfortable with consumer apps and software businesses. Many funds are still building the expertise to assess hardware and science-heavy ventures. Even if the money flowed tomorrow, there may not be enough experienced managers or ready-to-fund projects to absorb it productively.
What the Delay Costs
Delays like these are not just administrative inconveniences. They carry real costs.
Startups that planned their cash flow around expected funding face uncertainty. Some may slow hiring, delay prototypes, or turn to more expensive financing. Investors who wait too long may move on to other opportunities, or other countries. And the larger signal is damaging: if government support for advanced technology is seen as slow and unpredictable, private investors may become even more cautious.
This matters because the world is not waiting. Countries are racing in semiconductors, clean energy, space, artificial intelligence, and biotechnology. Each year of delay is ground lost in industries that will shape economic and strategic strength for decades.
Is the Design Flawed, or the Execution?
It is worth being fair here. The scheme’s structure is not the problem. Using professional fund managers, tying money to technical readiness, and offering patient capital are widely respected approaches. Many successful innovation programmes around the world work similarly.
Reports have raised concerns that a significant share of the first batch of TDB-backed projects had investment or professional links to members of the selection committee. When people suspect that insiders benefit, good fund managers and honest startups may hesitate to participate
The weakness is in implementation: how fast decisions are made, who makes them, and how transparently. That is good news in one sense, because implementation problems can be fixed without rebuilding the whole scheme.
How to Turn it Around
Here are the practical steps that could get the fund moving.
Put Experienced People in Charge
Government oversight is essential to guard public money, but day-to-day decisions should be shaped by people who have actually built and funded deep-tech companies. These could include successful founders, venture investors who have scaled hardware businesses, and technologists with experience in national missions like space or semiconductors.
India has shown it can do this. Its space programme, nuclear sector, and digital public infrastructure succeeded because capable experts were given clear mandates and enough operational freedom, alongside accountability. The RDI Fund needs the same combination. People who have lived through the long timelines and technical risks of deep-tech can spot good bets and weak ones far faster than a committee following a checklist.
Set Clear Deadlines and Speed Up Selection
Publish transparent criteria for choosing fund managers, covering track record, technical expertise, and their own money invested in the funds. Then commit to decisions in weeks, not quarters. Publishing scoring summaries would make the process visible and fair.
If government support for advanced technology is seen as slow and unpredictable, private investors may become even more cautious. This matters because the world is not waiting. Countries are racing in semiconductors, clean energy, space, artificial intelligence, and biotechnology
Starting with a first group of 10 to 15 strong funds would immediately put many more professional decision-makers to work. Money should then be released in instalments tied to real milestones, rather than being held up by repeated upstream clearances.
Tighten Conflict-of-Interest Rules
Committee members’ holdings should be disclosed publicly in real time, with clear rules on stepping aside when there is a potential conflict. An independent integrity unit could review borderline cases before decisions are final. Publishing anonymised investment notes and outcomes would allow outsiders to keep watch continuously, not just after a controversy erupts.
Cut Unnecessary Paperwork
Once a fund manager has proven itself, later capital requests should move more automatically when milestones are met. Standard legal documents and reporting formats would save startups and funds enormous time. Reporting schedules should also match how businesses actually work, not only how government calendars run.
Build the Ecosystem, Not Just the Fund
Money alone cannot create a pipeline of good projects. The scheme could co-fund expert panels for technical due diligence, shared testing facilities, and training programmes for engineers and fund managers. University research parks and industry groups could be encouraged to feed promising projects into the system. A deeper bench of specialists and a fuller pipeline of projects will make every rupee work harder.
Money alone cannot create a pipeline of good projects. The scheme could co-fund expert panels for technical due diligence, shared testing facilities, and training programmes for engineers and fund managers
Publish a Public Scorecard
A quarterly public dashboard could show how much money has been committed versus actually deployed, how many projects are advancing in technology readiness, how much private capital has been attracted, and how many prototypes and patents have reached the market. Future funding for managers could depend on these results. Visible tracking creates healthy pressure without heavy-handed interference.
What to Watch Next
A few signals will show whether the fund is truly getting back on track:
- Approval letters. Will the long-pending AIF applications finally be decided, and on what timeline?
- Disbursement numbers. Does the gap between the money allocated and the money actually released narrow in the coming quarters?
- Transparency measures. Will the government publish selection criteria, conflict-of-interest safeguards, and progress data?
- Private participation. Do private investors begin committing alongside the fund in meaningful amounts?
The RDI Fund remains one of India’s most ambitious tools for raising research spending and building strategic technological strength. The early numbers, with ₹500 crore out of ₹3,000 crore released and no approvals for 162 applicant funds, are disappointing
The Bottom Line
The RDI Fund remains one of India’s most ambitious tools for raising research spending and building strategic technological strength. The early numbers, with ₹500 crore out of ₹3,000 crore released and no approvals for 162 applicant funds, are disappointing, but they describe a problem of delivery rather than of vision.
A fund of this size does not need to be reinvented. It needs to be run with speed, expertise and transparency. If decision-makers with real deep-tech experience take the wheel, deadlines are enforced, fairness is visible and results are published openly, the scheme can still do what it was meant to do: turn public money into a multiplier for private innovation.
The window for course correction is still open. But the cost of waiting is not only measured in unspent crores. It is measured in the technologies India does not build, the companies that never get started, and the ground that is lost to countries that moved faster.
The writer is a defence journalist specialising in military affairs, security policy and defence technology. He reports extensively on operation strategies, defence manufacturing initiatives and geopolitical developments across the Indo-Pacific region. The views expressed are personal and do not necessarily carry the views of Raksha Anirveda
