India’s ₹1 trillion RDI fund to select next set of fund managers in a ‘couple of weeks’

New Delhi: India’s ₹1 trillion Research, Development and Innovation (RDI) fund, launched by the government to promote big-ticket investments in cutting-edge technology firms, is set to hold its final meeting to choose the next tranche of second-level fund managers in the next “couple of weeks”, said Jyoti Sharma, head of the RDI Cell.

“For second-level fund managers, the process is already moving very fast. We are now just waiting to take the final call. Our final meeting is due in the next couple of weeks,” Sharma told Mint on the sidelines of an event in New Delhi on Wednesday.

Crucially, Sharma added that the selection of these fund managers—venture capital firms and other alternate investment funds (AIFs) with a past history of investing in growing companies—will be “merit-based.”

“Whoever qualifies, the final decision will be taken by an empowered group of secretaries. There is an exclusive committee that will take the final decision. But there is no fixed number of fund managers that we are going to support, such as 5 or 10. It could be any number,” she added.

A second-level fund manager is an intermediary institution that receives capital from the government’s RDI corpus and disburses tranches to chosen startups or other early-stage technology companies through long-term, low-interest loans, or equity-based funding rounds. By March this year, the RDI Cell had selected TDB and Biotechnology Industry Research Assistance Council (Birac) as its first fund managers.

Conflict-of-interest claims

This was Sharma’s first interview since a 7 August investigation by The Indian Express, which claimed that 15 of the 22 startups funded in India’s first tranche of RDI investments had ties to seven members of its selection committee, raising questions over potential conflicts of interest.

On 31 July, before this report was published, the Press Information Bureau had said in a statement that “a comprehensive and robust conflict of interest policy is firmly in place at TDB (technology development board). This policy has been followed systematically over a long period without any complaint, grievance, or irregularity reported from any quarter”. It also said selections made by TDB followed “robust evaluation mechanisms, strict conflict of interest guidelines, and merit-based selection processes”.

In a reply to Parliament on 23 July, Jitendra Singh, union minister of state for science, said TDB had issued funds worth ₹2,192 crore to 22 startups as of that date, while Birac had issued ₹390.35 crore to eight startups.

Sharma said, “We are moving very fast. From November until now, we have already operationalized the scheme. There are already two second-level fund managers, and they have already launched their calls. We have already selected the first cohort of startups in the industry, and very soon we will announce the other second-level fund managers as well.”

‘Sector-agnostic’

The ambitious RDI scheme was announced in January 2025 and notified by prime minister Narendra Modi on 3 November. The first tranche of funds largely focused on space startups, which secured ₹833.89 crore in funding from the initial corpus, Mint reported on 10 June.

Sharma, however, claimed the RDI wasn’t focussed on any particular sector. “We haven't allocated a dedicated fund to any particular sector. Whoever comes and competes, we are happy to provide the funds. So, it is pretty much sector-agnostic. Every sector is equally important, and it all depends on how strong the project is,” she added.

She also pointed to RDI’s established framework, noting that eligible startups must meet a minimum technology readiness level (TRL) of 4. TRL refers to how advanced a startup is in its journey of developing its products and services, ranging from zero at an early concept stage, to nine at fully developed and mature product stages.

Calls to lower entry bar

Industry stakeholders and consultants said that funds selected as managers for RDI should have a mix of long-term investment expertise and sectoral expertise.

“If you want to be a meaningful investor in sectors such as quantum computing, you would be better served by actually understanding the technology. Having said that, when a fund is backing a startup at such an early stage, where a commercial product development is almost 10 years into the future, one is essentially funding a theme. For such bets, funds with a history of identifying the right theses, such as Peak XV, are crucial,” said Abhisek Mukherjee, managing partner and India lead at YCP India, a technology-focused management consulting firm.

He added, however, that the RDI Cell may look to re-evaluate its rule to invest only in startups above TRL-4. “In deep-tech, it is important to have patient capital, and government funds are crucial in that. In such a fund, if the clause is to restrict applicants only to TRL-4 and above, we may miss out on ventures that have a strong idea but may not have the initial seed capital. That should be the ground on which a fund like RDI should work,” Mukherjee said.