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Source: Political Science Solution

Context

The Union Cabinet, chaired by India's Prime Minister, recently authorized the Research Development and Innovation (RDI) Scheme with a capital of Rs. 1 lakh crore.

Key Aspects of the RDI Scheme

Targeting Private Sector Participation:

• Currently, government contributes ~70% of India’s total R&D expenditure, which is already low in terms of GDP percentage.
  
  
• The scheme seeks parity by aiming for private sector participation to also reach 70%.
  

Creation of Special Purpose Fund:

• A dedicated RDI fund will be established to ensure consistent financial support for R&D.
  
  
• The fund will be managed under the Anusandhan National Research Foundation (ANRF).
  

Role of ANRF:

• ANRF is an autonomous body under the Ministry of Science, mandated to promote R&D and mobilize private sector involvement.
  

Low-Interest Loans:

• The scheme will provide very low-interest loans to private entities involved in research, supporting scaling and innovation.
  

Single-Window Clearance Mechanism:

• Introduced under ANRF to streamline approvals, eliminating the need for multiple ministerial clearances.
  

Academic-Industrial Integration:

• Focus on collaborative research by linking academic institutions and industrial R&D, enabling innovation transfer from labs to large-scale development.

What is the Research, Development, and Innovation (RDI) Scheme? 

• About: It is a Ministry of Science and Technology program to increase private sector investment in basic and applied research, thereby driving the creation of innovative technologies and products. 
• This is a fund specifically for the corporate sector, as opposed to the Anusandhan National Research Foundation (ANRF), which primarily awards to academic institutions. 
• Scope: It encourages R&D in the sunrise and strategic industries by mitigating risk and giving concessional funds to private firms.  The funds will be used for four main purposes: promoting private R&D and innovation in sunrise sectors like biotechnology, robotics, drones, and climate change, funding transformative projects to improve technology readiness, and acquiring critical or strategically important technologies. 
• We are establishing a Deep Tech Fund of Funds to offer deep tech firms an alternative financing pathway.

Key Objectives of the Scheme

• Encourage the private sector to increase research, development, and innovation (RDI) in sunrise fields and other sectors important for economic security, strategic purpose, and self-reliance.
• Finance transformative projects that have higher levels of Technology Readiness Levels (TRL).
• Support the acquisition of technology with essential or high strategic value.
• Facilitate the creation of a Deep-Tech Fund of Funds.
• Funding Mechanism for the Research Development and Innovation (RDI) Scheme
• The RDI Scheme will use a two-tier funding system.
• At the first level, a Special Purpose Fund (SPF) will be established within the ANRF to serve as the custodian of money.
• The SPF monies will be dispersed to a range of second-level fund managers. The main way this will be accomplished is through long-term concessional loans.
• Second-level fund managers typically provide funding for R&D initiatives in the form of long-term loans with low or no interest rates.
• Equity financing is also an option, particularly for startups. Contributions to the Deep-Tech Fund of Funds (FoF) or any other FoF designated for RDI may also be considered.

Challenges Facing Private Sector Participation in R&D in India

1. Low R&D Spending by Industry

• The private sector invests only 0.2% of India’s GDP in R&D.
  
  
• This is significantly lower compared to countries like the US (2.7%), South Korea (3.9%), and the UK (2.1%).
  
  
• Indian businesses often prioritize short-term profits over long-term innovation.
  

2. Weak Industry-Academia Collaboration

• Lack of trust and alignment hinders cooperation.
  
  
• Academia focuses on theoretical research, while industry demands market-ready applications.
  
  
• Frequent disputes over Intellectual Property (IP) rights further weaken partnerships.
  

3. Market and Funding Challenges

• Early-stage and deep-tech innovations have low commercial viability.
  
  
• The critical “valley of death” phase (Technology Readiness Level 3–6) is often underfunded.
  
  
• There's a heavy reliance on public funding (e.g., DST, MeitY schemes), while entry barriers in defense and strategic sectors persist due to DRDO’s dominance.
  

4. Inadequate IP Protection & Enforcement

• Patent approvals take 3–6 years, and litigation is expensive.
  
  
• Weak enforcement leads to revenue loss in sectors like pharma generics and software due to piracy and counterfeiting.
  

5. Shortage of Skilled R&D Talent

• Brain drain remains a concern as skilled researchers move abroad.
  
  
• Skill mismatch in high-tech domains like AI and advanced materials hinders innovation.
  
  
• High setup costs for labs (e.g., semiconductors, biotech) and restricted access to public infrastructure (like CSIR labs) limit progress.
  

6. Low-Risk Appetite

• Cultural barriers, fear of failure, and hierarchical work environments reduce risk-taking and curb innovation among researchers.

Way Forward

To bridge India’s low R&D investment (4.93%), the private sector must take proactive steps:

1. Increased Private Sector Investment

• Enhance R&D spending, especially in pharmaceuticals, IT, renewable energy, and advanced manufacturing.
  
  
• Promote collaborative research with premier institutions like IITs, IISc, NITs, and research labs such as CSIR, DRDO, and ISRO.
  

2. Public-Private Partnerships (PPPs)

• Participate in joint innovation funds under missions like Atal Innovation Mission and the upcoming National Research Foundation (NRF).
  
  
• Invest in technology incubators like T-Hub and C-CAMP.
  
  
• Collaborate with corporate accelerators such as Microsoft for Startups and Google Launchpad to support innovation ecosystems.
  

3. Corporate Venture Capital (CVC)

• Invest in deep-tech startups (AI, biotech, quantum, space tech).
  
  
• Provide mentorship, funding, and global market access to scale innovations.
  

4. Incentivizing Innovation

• Establish in-house innovation labs for disruptive technologies.
  
  
• Encourage patent filing by employees, following examples of Wipro, HCL, and Biocon.
  

5. CSR for R&D

• Allocate CSR funds towards STEM education, rural innovation, and grassroots research.
  

6. Technology Adoption

• Promote emerging tech such as AI, IoT, and Blockchain in sectors like agriculture, healthcare, and logistics.

Practice Question Q. Analyse in the context of the recently launched ₹1-lakh crore Research Development and Innovation (RDI) scheme.