India's INR 1 Lakh Crore R&D Push: A Game-Changer for Deep-Tech Startups

Entrepreneur

09-07-2025

This will encourage the private sector to scale up research, development, and innovation (RDI) in sunrise domains and in other sectors relevant for economic security, strategic purposes, and self-reliance
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Innovative products are the lungs of the business world; however, these products find their foundation in deep Research and Development (R&D). When we look into its market size in India, it shows a significant gap compared to developed economies.
According to the Economic Survey 2025, the gross expenditure on R&D (GERD) in India has risen from approximately INR 60,196 crore in FY11 to INR 1,27,381 crore in FY21–22. However, this still represents only 0.64 per cent of the country's GDP, which is significantly lower than that of many other nations that have made substantial advancements in R&D.
For example, China, Japan, South Korea, and the US see private enterprises contributing over 50 per cent of their total R&D expenditure. In the US, tech giants such as Google and Amazon alone account for around 70 per cent of the nation's R&D spending. Meanwhile, China's R&D investment, which stands at 2.1 per cent of its GDP, is driven by a combination of substantial government funding and increasing private sector participation.
In a new development to bolster R&D in India, the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Research Development and Innovation (RDI) Scheme, which will provide INR 1 lakh crore to encourage the private sector to scale up research, development, and innovation (RDI) in sunrise domains and in other sectors relevant for economic security, strategic purposes, and self-reliance.
Additionally, the scheme will support financing of transformative projects at higher levels of Technology Readiness Levels (TRL), acquisition of technologies critical or of high strategic importance, and facilitate the setting up of a Deep-Tech Fund of Funds.
Sunil Shekhawat, CEO of SanchiConnect, strongly believes this scheme will change the fate of emerging tech, especially deep tech. "By unlocking a INR 1 lakh crore corpus through long-term, low‑to-zero‑interest capital, the RDI Scheme addresses the chronic financing bottlenecks that deep‑tech startups and frontier‑tech firms face in India. The introduction of a dedicated Deep‑Tech Fund of Funds further signals a strategic shift from speculative investing to mission‑driven capital deployment, enabling startups to take on riskier, high‑TRL projects."
He further added that the early reactions from industry bodies in electronics and space have called this a 'game‑changer' for deep‑tech innovation, noting that it will foster stronger industry-academia collaborations, attract specialist fund managers, and accelerate the commercialisation of cutting‑edge research. "For India's evolving deep‑tech ecosystem, the RDI Scheme doesn't just plug a funding gap; it reshapes the landscape by creating a scalable platform for sustained, government‑backed risk capital, positioning India to emerge as a global hub of technology-led growth."
"This isn't just more funding, it's a whole new toolkit that offers affordable capital, expert guidance, and smoother paths from lab ideas to market-ready products. In short, it gives deep‑tech innovators the freedom and support to dream bigger, build better, and compete globally," Ankit Kedia, Founder of Capital-A, added.
Further, Chirag Gupta, Managing Partner at 8X Ventures, said, "This scheme represents a transformative leap, directly tackling the longstanding scarcity of capital that has constrained deep-tech innovation in India, particularly the critical 'valley of death' between R&D-led breakthroughs and commercialisation."
He also emphasised, "With a clear emphasis on sunrise sectors such as semiconductors, robotics, AI, quantum computing, biotechnology, and clean energy, this move signals India's shift from policy aspirations to impactful execution. This bold initiative significantly enhances our technological sovereignty, positioning India strongly toward achieving the vision of Viksit Bharat by 2047," he concluded.