Cabinet nod for Rs 1 lakh crore scheme to spur private investments in R&D

I&B Minister Ashwini Vaishnaw said that the scheme aims to provide long-term financing or refinancing with long tenors at low or nil interest rates to spur private sector investment in research, development and innovation.

New Delhi: The Union Cabinet on Tuesday cleared a Rs one lakh crore R&D scheme for the private sector hoping to spur research and innovation among the corporates by using the government money to mitigate the risks associated with such projects.

The Research, Development and Innovation scheme with such a huge corpus will be administered by the Anusandhan National Research Foundation, the government’s mega science funding body.

“This is a special purpose fund only for the private sector. Unlike the ANRF which provides grants to the academia, this scheme will provide long term loans to the private sector or provide equity investment,” Abhay Karandikar, Secretary, Department of Science and Technology told DH.

The ANRF will identify the second level fund managers – agencies like SIDBI or BIRAC – which will provide the money to the selected firms.

Unlike the western nations, Indian private companies invest very little into research, due to the risks associated with research and low return on investment. “This scheme will help mitigate the initial risks for the corporates,” Karandikar said.

There will be four ways to use the money: (1) encourage private R&D and innovation particularly in the sunrise sectors like biotechnology, robotics, drones and climate change; (2) finance transformative projects for a higher level of technology readiness and (3) support acquisition of technologies that are critical or of high strategic importance.

The money can also be used to set up a deep tech fund of funds, an alternative funding channel for startups in the deep tech sector.

Presenting the Union Budget in the Lok Sabha on February 1, Union Finance Minister Nirmala Sitharaman proposed launching the Research, Development and Innovation scheme for the private sector and creation of a deep tech fund of funds.

While Sitharaman proposed allocating Rs 20,000 for the RDI scheme, she didn’t earmark any money for the deep tech fund of funds. A couple of months later, Union Commerce Minister Piyush Goyal said the fund will have a corpus of Rs 10,000 crore.

The ANRF governing board chaired by the Prime Minister will provide the overall direction to the RDI programme while the foundation’s executive council will approve the scheme’s guidelines and recommend the second level fund-managers, who in turn will issue the call for proposals.