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PM Modi Launches ₹1 Trillion Innovation Fund to Boost Private Sector-Led R&D

A Landmark Step in India’s Innovation Financing In a major policy intervention to strengthen India’s research and technology ecosystem, Prime Minister Narendra Modi on Monday...

Nov 4
4 min read
PM Modi Launches ₹1 Trillion Innovation Fund to Boost Private Sector-Led R&D

A Landmark Step in India’s Innovation Financing

In a major policy intervention to strengthen India’s research and technology ecosystem, Prime Minister Narendra Modi on Monday announced a ₹1 trillion Research, Development and Innovation (RDI) Fund, designed to accelerate private sector-led innovation and bridge the gap between early-stage research and commercial application.

The initiative was unveiled at the Emerging Science, Technology and Innovation Conclave (ESTIC) 2025 in New Delhi, marking one of the most ambitious funding programmes for R&D in India’s history.

“This is the first time capital is being allocated for high-risk, high-impact projects,” Modi said, underscoring the fund’s focus on “ease of doing research” and the government’s intent to make India a global hub for scientific breakthroughs.

How the RDI Fund Will Work

The Department of Science and Technology (DST) will serve as the nodal ministry for the initiative, overseeing its implementation through a two-tier funding architecture:

  • Level I: A Special Purpose Fund (SPF) under the Anusandhan National Research Foundation (NRF) will act as the primary custodian of the corpus.

  • Level II: The SPF will route capital through professional financial intermediaries — including Alternate Investment Funds (AIFs), Development Finance Institutions (DFIs), Non-Banking Financial Companies (NBFCs), and Focused Research Organisations (FROs) such as the Technology Development Board (TDB), Biotechnology Industry Research Assistance Council (BIRAC), and IIT Research Parks.

Instead of providing traditional grants, the fund will deploy long-tenure, low- or zero-interest loans and equity infusions, particularly targeting deeptech startups and frontier technology ventures.

Key focus areas include:

  • Energy security and transition

  • Quantum computing

  • Robotics

  • Space technology

  • Biotechnology

  • Artificial intelligence (AI)

Catalysing Private Innovation and Sovereign Tech Capabilities

Industry leaders and venture investors have hailed the RDI Fund as a transformative step in India’s innovation landscape.

Rajat Tandon, president of the Indian Venture and Alternate Capital Association (IVCA), said the initiative “lays the foundation for a new era of public-private collaboration in research and technology, anchored in patient capital that supports long-term innovation.”

Manu Iyer, general partner at Bluehill.VC, called the fund “a bridge between early-stage research and commercial deployment,” adding that it will enable deeptech startups to “take bigger bets in frontier technologies” and accelerate India’s journey towards sovereign capabilities in defence, semiconductors, and biotech.

Cdr Navneet Kaushik, founder of Jamwant Ventures, praised the structure’s inclusivity, noting that the fund “extends patient capital not just to startups, but also to established industries for sustained R&D — something traditional venture models often overlook.”

Expert View: A Push Towards Global Competitiveness

Economists and innovation policy experts see the RDI Fund as a crucial tool for boosting India’s research intensity, currently at just 0.6% of GDP, compared to 2.4% in China and over 3% in the U.S.

Kushal Bhagia, founder of All In Capital, said the fund could “reshape investor appetite for technical risk” and strengthen India’s competitiveness in intellectual property-driven sectors.

Ashwin Raguraman, co-founder of Bharat Innovation Fund, described it as “a statement that India aims to evolve into a nation of creators, not just consumers,” adding that it could attract complementary global capital into the country’s deeptech ecosystem.

Deeptech on the Rise

According to data from Tracxn, India’s deeptech investments have shown steady growth — rising from $1.3 billion in 2023 to $1.52 billion in 2024, spread across 456 funding rounds. In 2025 so far, the sector has already attracted $1.44 billion across 248 rounds, signalling increasing investor confidence.

Deeptech startup Mindgrove Technologies said in a statement that the RDI Fund “de-risks early-stage research and fosters collaboration between academia, industry, and startups,” enabling long-term scientific inquiry to flourish.

A Strategic Bet on the Future

By institutionalising a financing mechanism for high-risk, high-reward research, India is seeking to move beyond incremental innovation and towards breakthrough discoveries. Analysts note that this approach mirrors global models like the U.S. DARPA and EU Horizon frameworks, which have historically underpinned major scientific and industrial revolutions.

As Prime Minister Modi put it at the conclave, “The world is changing exponentially, not linearly. For India to lead this change, innovation must become a national habit.”

The ₹1 trillion RDI Fund could well mark the beginning of that transformation — turning India’s scientific aspirations into sustained, globally competitive outcomes.