India has produced CEOs for some of the world’s largest technology companies, built one of the world’s most vibrant startup ecosystems, and demonstrated how digital public infrastructure can transform a nation at scale. Yet one question has lingered beneath these achievements: why has a country with such extraordinary scientific and engineering talent produced so few globally dominant deep-technology companies of its own?

The reasons are complex, spanning decades of policy evolution, institutional choices and industrial priorities. Yet they consistently point towards one persistent challenge: India’s innovation ecosystem has struggled to provide patient capital for long-gestation scientific research.

This is not a deficit of capital in the conventional sense of venture funding or bank loans. The startup ecosystem has seen record investments over the past decade, particularly in fintech, e-commerce, software-as-a-service, and digital platforms. Those sectors thrive because they can demonstrate rapid growth, scale efficiently, and deliver returns within the three-to-five-year investment cycles that most venture capital firms understand.

Deep technology, however, follows an entirely different economic logic.

A company developing a new semiconductor architecture may spend years before producing its first commercial chip. A biotechnology startup working on a novel therapeutic platform may require a decade of research before regulatory approvals even become a possibility. These are industries where failure is common, timelines are measured in years rather than quarters, and commercial success often arrives only after years of experimentation.

Traditional financing models rarely reward that kind of patience. Banks are generally reluctant to finance projects with uncertain outcomes and limited collateral. Venture capital funds, despite their appetite for risk, seek scalable businesses capable of delivering significant returns within defined investment horizons. Public markets tend to reward predictable earnings over scientific exploration.

The consequence is a financing gap that has stifled domestic innovation for decades. Ideas emerge. Research progresses. Proofs of concept are demonstrated. And then, they stall. Many promising innovations struggle to cross the “valley of death” from laboratory to commercial market because the capital required to bridge that journey is either unavailable or prohibitively expensive.

It is precisely this gap that the ₹1 lakh crore Research, Development and Innovation (RDI) Scheme—approved by the Union Cabinet and operationalised under the Anusandhan National Research Foundation (ANRF)—seeks to bridge.

The Anusandhan National Research Foundation itself represents an important institutional reform, created to strengthen collaboration between academia, industry, and government while expanding the role of private-sector participation in research. What distinguishes the RDI Scheme from previous research initiatives is not simply its size, but its philosophy. It recognises that frontier innovation cannot be financed using conventional banking principles or short investment cycles. By introducing concessional long-term financing, catalytic capital, and professional fund managers, the scheme attempts to address one of the oldest weaknesses in India’s innovation ecosystem—the gap between scientific discovery and commercial deployment. In many ways, it marks a transition from funding research as an academic exercise to financing innovation as an economic strategy.

The Anusandhan National Research Foundation itself represents an important institutional reform, created to strengthen collaboration between academia, industry, and government while expanding the role of private-sector participation in research.

The timing of the RDI Scheme is significant. Around the world, governments are reassessing technological resilience in areas such as semiconductors, artificial intelligence, biotechnology, clean energy, and defence systems. Supply-chain disruptions, geopolitical tensions, and rapid technological competition have made research capability not merely an economic priority but a strategic necessity. India’s decision to strengthen private-sector participation in research reflects this changing global landscape as much as domestic economic ambitions.

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India is not alone in rethinking the economics of innovation. Governments across the world are increasing investments in strategic technologies as supply chains become more fragmented, technological competition intensifies, and economic resilience becomes a national priority. Artificial intelligence, semiconductors, quantum technologies, biotechnology, and advanced manufacturing are no longer viewed simply as commercial sectors; they are increasingly regarded as strategic capabilities. In that global race, the ability to finance long-term research has become as important as the ability to manufacture products.

India’s R&D Problem is Not New

The challenge did not begin with startups, nor with artificial intelligence. For decades, the research ecosystem evolved around public laboratories and universities, while industry remained a relatively modest investor in scientific research.

There were historical reasons for this. After Independence, the state assumed primary responsibility for building scientific capacity because private industry was small, capital scarce, and technological capabilities limited. That model helped establish institutions such as CSIR, DRDO, and ISRO. It also created a culture in which research became largely a public-sector responsibility.

As the economy liberalised, industry expanded rapidly—but private R&D investment never kept pace with the country’s economic ambitions.

South Korea invests more than 4% of its GDP in research and development. Israel spends close to 6%, among the highest in the world. The United States consistently invests above 3%, while China has steadily increased its research intensity over the past two decades. India’s R&D expenditure has historically remained below 1% of GDP, with government funding accounting for a disproportionately large share.

The contrast is not merely statistical. It reflects fundamentally different innovation models.

Prof. Abhay Karandikar, Secretary of the Department of Science and Technology, has argued that a large segment of Indian industry simply does not have a deeply embedded R&D culture. Without internal research capabilities, he noted, it becomes difficult for industry to engage meaningfully with academia. According to Prof. Karandikar, the ultimate goal of the ₹1 lakh crore fund is to build industry capability over time so that collaboration with academia becomes more organic and sustained.

Viewed through this lens, the ₹1 lakh crore fund is a deliberate behavioural nudge designed to incentivise domestic industries to build the internal capacity necessary to absorb and commercialise academic research.

For students choosing research careers, founders building deep-tech ventures, and young engineers considering higher studies, this shift could prove consequential.

This ambition extends beyond corporate balance sheets to the realm of national security. Dr. Jitendra Singh, Union Minister of State for Science & Technology, explicitly framed the initiative as a pivot toward technological independence. In public addresses regarding the fund, Dr. Singh has consistently emphasised that it is dedicated to driving sovereign technology ambitions, enabling the nation not only to generate ideas but also to industrialise them.

His remarks mark a tacit acknowledgement that the 21st-century mandate for technological sovereignty cannot rest entirely on the shoulders of state-run labs. The private sector must co-own the frontier.

For students choosing research careers, founders building deep-tech ventures, and young engineers considering higher studies, this shift could prove consequential. The sectors prioritised under the RDI Scheme—artificial intelligence, semiconductors, quantum technologies, biotechnology, climate technologies, and advanced manufacturing—are also likely to become among India’s fastest-growing knowledge-intensive career opportunities over the next decade.

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The Road from Policy to Impact

To achieve this, the government avoided a traditional bureaucratic disbursement model. Instead, the RDI Scheme operates through a carefully designed two-tier architecture.

Historically, having government departments directly pick commercial technology winners has resulted in severe delays, misallocation of risk, and bureaucratic friction. Under the new model, a Special Purpose Fund (SPF) under ANRF acts purely as the custodian of the capital. The actual deployment is handed over to “Second Level Fund Managers” (SLFMs)—which include Alternative Investment Funds (AIFs), Development Finance Institutions (DFIs), and specialized entities like the Technology Development Board (TDB) and BIRAC.

These professional fund managers assess the technological merit and commercial viability of proposals, deploying capital for mid- to late-stage technologies, exactly where the traditional market refuses to tread. By shifting the government’s role from direct investor to strategic enabler, the scheme aligns with global innovation-finance practices.

The ultimate goal is not for the government to permanently underwrite the deep-tech ecosystem. According to Prof. Ajay Kumar Sood, Principal Scientific Adviser to the Government of India, public money is intended to be a starting catalyst. The explicit hope is that this ₹1 lakh crore commitment will crowd in five to ten times more capital from the private sector.

Innovation experts have long observed that India has announced several ambitious research initiatives over the years, and their impact has often depended less on funding and more on implementation, institutional coordination, and industry participation. The RDI Scheme has been consciously designed to address many of these concerns. Its long-term success will now depend on how effectively these design principles translate into outcomes.

Every ambitious policy eventually reaches a point where design gives way to execution. The RDI Scheme will be no different. The creation of a two-tier funding architecture reflects an awareness of challenges that have historically affected public financing of innovation. The emphasis on professional fund managers, long-tenor financing, and catalytic capital suggests that the scheme has been consciously designed to address many of these structural constraints.

What the RDI Scheme Means for Students, Researchers, and Startups Who Can Benefit: The scheme targets eligible tech entities—ranging from deep-tech startups to established corporates—registered in India.

The next phase will be ensuring that this architecture functions with the speed, transparency, and flexibility that frontier innovation demands. Deep-tech research rarely follows predictable timelines, and breakthrough technologies often emerge only after multiple iterations and occasional failures. Building institutional confidence around this reality will be just as important as deploying capital itself.

What the RDI Scheme Means for Students, Researchers, and Startups

• Who Can Benefit: The scheme targets eligible tech entities—ranging from deep-tech startups to established corporates—registered in India. Funding is strictly deployed for mid- to late-stage technologies, bridging the gap to commercialisation.
• Priority Sectors: Capital is earmarked for strategic verticals, including AI, advanced materials, semiconductor design, biotechnology, quantum computing, and clean energy.
• Why Deep-Tech Careers Will Grow: As the private sector scales up its internal R&D capacity to absorb this funding, demand will surge for highly specialised talent—PhD scientists, AI researchers, and quantum engineers—shifting high-end career opportunities back to India.
• What University Researchers Should Watch: The ANRF’s mandate strongly encourages industry-academia linkages. Researchers focusing on translational science and scalable applications will find it much easier to partner with corporates looking for deployable IP.
• Why Founders Should Pay Attention: The fund offers long-tenor, low-interest loans (and in some cases, equity participation) designed explicitly as patient capital—funding that won’t demand an exit in five years.

A New Horizon for the Next Generation

Whether the RDI Scheme ultimately fulfils its promise will only become clear over the coming decade. But one thing is already evident: India has recognised that the next phase of its economic journey cannot be powered by scale alone. It must increasingly be driven by original ideas, frontier research, and technologies developed at home.

Every generation inherits a defining national challenge.

For the generation that built post-liberalisation India, it was integrating with the global economy.

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For the generation that built Digital India, it was connecting a billion people.

The generation now entering universities, laboratories, and startups faces a different mission—to help India become not merely a consumer of technology, nor simply a manufacturer of it, but one of the world’s foremost creators of it.

History rarely remembers policy announcements. It remembers the institutions they build, the industries they nurture, and the generations they inspire. The most valuable infrastructure any nation can build is not always visible. Sometimes it is the confidence to invest in ideas before the world knows they will matter. If the RDI Scheme succeeds, that may well become its greatest legacy.

References

• Union Cabinet approval of the Research, Development and Innovation (RDI) Scheme
• ANRF operational guidelines
• Press Information Bureau releases
• Department of Science & Technology
• OECD Main Science and Technology Indicators
• UNESCO Institute for Statistics
• Public speeches and interviews by Prof. Abhay Karandikar, Prof. Ajay Kumar Sood and Dr. Jitendra Singh

Editor’s Note: This article draws upon official government documents, public speeches, policy papers and internationally recognized innovation datasets. All quotations should be verified against their original published sources prior to publication.