The RDI Fund - National Game Changer, Acing the New World

Saurabh Srivastava

THE GLOBAL LANDSCAPE IS UNDERGOING A PROFOUND TRANSFORMATION. Geopolitical alliances are being redrawn, economic borders are tightening and tariffs, technologies and entire supply chains are being weaponized with impunity. In this New World Order, national sovereignty has become synonymous with technology sovereignty.

The Modi government’s response to this changing landscape has been pragmatic and ambitious. The elephant of the past is “tigering” its way to the future. Over the past decade, it has laid the foundation for a modern innovation economy – expanding its digital public infrastructure (DPI), opening strategic sectors like defence and space to private enterprise and nurturing the world’s third largest startup ecosystem. Now the PM has decided to tackle India’s Achilles heel - its chronic underinvestment in R&D. 

In 2024, India’s total R&D expenditure stood at about $18 billion — under one-twentieth of China’s $450 billion, and even below Israel’s $25 billion. To achieve leadership in strategic and critical technologies, India must target at least USD 200 billion by 2035—roughly 3% of our projected GDP. This will require both a significant increase in government funding and an even greater commitment from industry, which today contributes to only a third of the country’s R&D spend, the precise opposite of the global trend. The challenge is considerable—but not insurmountable.

A quiet revolution in research

India already has a stronger scientific and institutional base than many realise. Our leading institutions, particularly the IITs and IISc, now produce more postgraduate scholars than undergraduates. The scale and quality of R&D at these institutions has also risen sharply. Some examples. IIT Madras has created the world’s most detailed 3D images of the human foetal brain at a resolution ten times sharper and at a tenth of the global cost. IIT Kanpur has developed an artificial heart projected to cost one-seventh the price of the current market leader. IIT Bombay has pioneered CAR-T cell therapy for cancer, slashing treatment costs for Indian patients by up to 90%. And IISc Bangalore has created a brain-inspired analog computing platform with 16,500 conductance states in a single molecular film - revolutionizing AI computing by replacing the binary logic of conventional machines with vastly more efficient neuromorphic systems.

This surge in innovation has been matched by the Modi government’s policy actions. The new framework for the ease of doing research has removed layers of approvals and given scientists greater autonomy. These reforms have been hailed by the academic community as akin to the 1991 economic liberalization moment, ushering in a more enabling environment for innovation.The creation of ANRF, modeled in part on the US’s NSF, is set to reshape India’s research landscape. With a projected ₹50,000 crore budget over five years, it will fund both basic and applied research across India’s universities, colleges, research institutions and R&D labs with industry collaboration at its core. Notably, it is led by a distinguished CEO from industry, bringing a results-oriented, cross-sectoral perspective to its operations. 

Enter the RDI Fund

If the ANRF is about capacity building, the new ₹1 lakh cr Research, Development and Innovation (RDI) Fund is about unleashing ambition. Easily the most transformative initiative yet, it aims to catalyse private-sector R&D investment in strategic and emerging technologies. It will offer long term, low-cost financing, including equity and hybrid instruments, to corporates, startups and FROs developing breakthrough technologies in fields such as semiconductors, quantum computing, space, biotech, energy and more.

Crucially, the fund will be managed by professionals, not government, with investment decisions made by independent committees of experts from finance, industry and technology. In design and intent, it presents a historic opportunity for government and industry to work together and innovate across sectors. The Department of Science and Technology’s extensive consultations with all stakeholders augurs well for an efficient execution. The RDI Fund has the potential to transform India’s deep-tech ecosystem and provide India the strategic autonomy it needs in a world where China is trying to develop and enforce a new set of global trading norms on the ruins of the old liberal order.

Learning from history

There are historical parallels worth remembering. Not many of us realise that the US was not the global leader in technology and innovation at the end of World War II. Its transformation began with ‘Science - the Endless Frontier’, a 1945 report commissioned by President Roosevelt and authored by Vannevar Bush, which led to the creation of NSF and other agencies. It argued that to combat disease, ensure national security, raise living standards and create new industries and jobs, the government must invest in R&D, create scientific infrastructure, develop talent and incentivize the private sector to invest in R&D. This vision powered America’s post-war dominance.

As Harvard professor Tarun Khanna has observed, “In recorded human history, there is no society which has transitioned from middle income to high income without a focus on and significant investments in R&D”. For India to achieve the Prime Minister’s vision of a Viksit Bharat by 2047, innovation and technological excellence must become a national mission – one that is shared across sectors and institutions.

All hands on deck

The government, at the highest level, has played its strongest hand yet. Now, others too must rise to the occasion.

All arms of government must recognize that this is a critical national bet, which demands urgency, conviction and courage. Occasional mistakes are inevitable in breakthrough research – they should be treated as learning, not lapses. If implementation becomes risk averse, the opportunity will slip away. India is already behind in R&D investments; if we play it too safe now, we will be sorry later.

Countries around the world-not just China- have found ways to give domestic technologies preferential access to their markets, allowing their companies to hone their products to perfection before taking on the world. Unless we do the same, many of our potential future global winners may be still born and our path breaking initiatives may underachieve their potential

In global innovation ecosystems - from the US to China, Japan, South Korea - the most valuable companies are built on intellectual property and human capital. In contrast, Indian industry has historically underinvested in proprietary innovation. They have the financial and organizational muscle to take cutting-edge research from lab to market. They must invest more in R&D, collaborate with academia, acquire or fund promising startups and place more faith in Indian science. Our startups are already showing the way.

The path ahead

India’s DPI – Aadhar, UPI, ONDC and more – has already shown how visionary public policy, executed at scale, can transform governance and inclusion. The RDI Fund has the potential to do the same for innovation.The tools are in place, the timing is right. If government, industry and academia pull together, the RDI Fund could be the start of a new innings – one where India not only participates in the technology race but sets the pace. 

(The Author is the Cofounder and Past Chairman, NASSCOM, IVCA, TIE)

November 01, 2025