Govt clears two fund managers to roll out ₹1 trillion deep-tech RDI scheme

The approvals mark the first concrete step toward rolling out the scheme, announced earlier this year and cleared by the Union cabinet in July, to strengthen domestic deep-tech research and development (R&D).

With the fund-management structure taking shape, the first tranche of applications from startups under the RDI scheme is expected to open by March 2026 across sectors including industrial electronics, semiconductors and quantum computing.

The officials, requesting anonymity, said that Biotechnology Industry Research Assistance Council (Birac) and the Technology Development Board (TDB) have been approved by DST’s RDI cell to handle the rollout of funds. Two other entities—Small Industries Development Bank of India (Sidbi) and SBI Funds Management Ltd, the AIF arm of the country’s largest public-sector lender—are close to being finalized.

“The RDI scheme has the need for four fund managers to handle the amount—one alternative investment funds (AIF) firm, one industrial bank, one technology specialist and one product specialist. DST is looking for bodies that have experience in understanding deep technologies, which is why the process of appointing the managers has taken long," one of the three officials cited above said.

“Implementation of the scheme will be carried out through second-level fund managers, which may include alternate investment funds (AIFs), development finance institutions (DFIs), non-banking finance companies (NBFCs) and focused research organizations (FROs). TDB and Birac were identified in the Cabinet Note as potential fund managers, and the process of onboarding them is underway. As statutory bodies under the ministry, they may be appointed by nomination under the scheme guidelines," Jyoti Sharma, head—RDI cell, Department of Science and Technology, told Mint.

For onboarding additional fund managers, a notice inviting applications has been issued and is available on the RDI Fund website, Sharma said, adding that appointments will be made after evaluating proposals from eligible AIFs, DFIs, NBFCs and FROs.

A second official added that during a roundtable with industry stakeholders in Bengaluru on 4 December, RDI cell head Sharma indicated that the remaining two fund managers could be finalized within three months, if not earlier. This was the second such industry consultation after an earlier meeting in Mumbai, with a third planned in Delhi in the coming weeks.

Queries sent to the DST secretary, Birac, Sidbi and SBI-AIF remained unanswered at press time.

According to the officials, Birac and TDB are set to formally open applications within the next few weeks to fund research-based product development, with the other two managers expected to begin similar processes before the end of this fiscal year.

Eligibility and funding rules

“The RDI fund will only be made available to an India-registered company, whose controlling decisions are headed and managed by an Indian citizen. This is being done to ensure that the intellectual property, which has to be registered in India, adds to the gross domestic product of India itself," said Ashok Chandak, president of industry body, India Electronics and Semiconductor Association (Iesa).

Iesa is working with DST’s RDI cell to enable industry dialogues.

“The DST has not decided on an upper cap for the maximum amount that a company can raise, and the idea is that they will figure this out as they speak with more startups and research divisions of companies," the second official said, adding that the DST is taking a 50-50 approach to this fund, wherein startups applying for funding under the scheme would need to raise an amount equivalent to what they receive from RDI, from private investors.

Sharma confirmed that DST has not finalized whether there will be an upper limit on the amount of funding a company can request.

“This is being done to bring large industrial entities and private investors on to the deep-tech funding table, and boost R&D spending among Indian corporates," the official added.

The finance ministry has allocated ₹20,000 crore to the RDI scheme for FY26. While the fund remains unused so far, disbursals are expected to begin by the end of the 2026 calendar year. Any funds issued beyond March 2026 will fall under a fresh tranche.

Industry response

Industry stakeholders said the scheme could play a key role in supporting India’s tech-product ecosystem.

“Our operations in FSID, at IISc Bangalore, have so far been based on research grants from the government, in order to help companies develop products that cater to strategic import substitution opportunities. Going forward, the rollout of the RDI fund can help bring forth a larger amount of funds to entities developing products, and help scale to supply the market," said Yogesh Pandit, director of product acceleration, Foundation of Science, Innovation and Development (FSID) at IISc Bangalore.

Pandit, who leads Pravriddhi, the FSID’s product acceleration programme, has supported eight entities in securing funds through a 75-25 mix of research grants and private equity.

One example is Predictive Edge, an IIoT startup that monitors voltage, current and vibration of rotating machines to predict service needs. Another is Kirloskar Pneumatic Co. Ltd, which said in a note that it is working with IISc Bangalore and the Ministry of Heavy Industries to “explore improvements in compressor performance, advanced materials, and intelligent process systems."

“With the RDI scheme, companies will have a larger go-to fund to rely upon to develop technologies and make a large number of products indigenously that are imported today," Pandit added.

Chandak added that the scheme could prove to be significantly valuable for domestic electronics and semiconductor design companies in building patents and product reference designs.

“The scheme has been designed to work differently from the IT ministry’s production-linked incentive schemes, which are designed to help established companies generate scale now. With the RDI scheme, the DST is looking at a 10-year roadmap of product development, giving them large development and gestation time to build high-tech products at scale," he said.