India's ₹1 Lakh Cr RDI Scheme to Boost Startups

New Delhi, Jul 5 (PTI) The new Research Development and Innovation (RDI) scheme with a corpus of Rs 1 lakh crore will help the industry and startups access funds to undertake research in key technology sectors, such as quantum computing, robotics, and artificial intelligence, a government official said.

The scheme, approved by the Union Cabinet on July 1, will help boost domestic manufacturing of high-end goods and services and create jobs in the country. It will also support the acquisition of critical technologies and facilitate the establishment of a deep-tech fund of funds.

The announcement is important as expenditure on research and development in India is just 0.65 per cent of GDP -- much lower than the global average of 2.7 per cent. Some of the major countries having high R&D expenditure include Israel (6.3 per cent), South Korea (5 per cent), Singapore (2.2 per cent), the UK (2.9 per cent) and the US (3.6 per cent).

According to some reports, the share of private sector investment in R&D is low because companies often see this as a cost rather than an investment.

"Investment in R&D is important for private sector firms and startups as it helps bring new products and services into the market," the official said.

The government has taken a series of measures to promote budding entrepreneurs in the country under the Startup India initiative, launched in 2016. The RDI scheme is formulated to overcome the constraints and challenges in funding the private sector in research, development, and innovation.

This scheme, another official said, will provide long-term financing or refinancing with low or nil interest rates. Financing in the form of equity would also be possible, especially for startups.

Out of Rs 1 lakh crore, Rs 20,000 crore has already been allocated in the Budget for this fiscal. Private capital may also come from the funds promoted by Deep Tech Fund of Funds.

"One key thing in the scheme is that any ministry that wants to have a technology included under the scheme can send a proposal to the Department of Science and Technology for consideration," the official said.

The governing board of Anusandhan National Research Foundation (ANRF), chaired by the prime minister, will provide an overarching strategic direction to the RDI scheme.

The Executive Council of ANRF will approve the scheme's guidelines, and recommend second-level fund managers and scope and type of projects in the sunrise sectors.

An Empowered Group of Secretaries led by the Cabinet Secretary, will be responsible for approving scheme changes, sectors and types of projects as well as second-level fund managers besides reviewing the performance of the scheme.

The government shall provide a 50-year interest-free loan to the Special Purpose Fund under ANRF which would further provide funds to second-level fund managers.

These second-level fund managers can be AIFs (alternate investment funds), NBFCs (Non-Banking Financial Companies) or even Focussed Research Organisations.

It would be an investment committee of such second-level fund managers having a mix of technical and financial experts from private sector, academia, technology, and finance sectors who would select the specific projects.

"Thus, in this way, a system has been designed to be able to undertake independent decisions and help in jumpstarting India's R&D ecosystem," the official added.

The Department of Science and Technology will serve as the nodal department for the implementation of the scheme and will come out with detailed guidelines, which would also provide effective recycling of capital to keep supporting the RDI efforts of the private sector.