K Gopalakrishnan & Prasad Gadkari Respectively co-founder, Infosys, & chairman, Axilor Ventures, and executive director & chief strategy officer, NIIF
India’s ambition to lead in cutting-edge sectors like artificial intelligence, quantum computing, biotech, and advanced manufacturing needs a critical enabler—capital that matches the long, risky, and often uncertain journey of research and innovation.While talent and ideas are abundant, India requires an institutional mechanism to finance high-risk, high-impact research and development (R&D), particularly in the private sector. The government’s Rs 1-lakh crore Research and Development Innovation Fund (RDIF) is among the most ambitious initiatives to have been launched to support deep-tech and frontier innovation.
Structured to provide long-term risk capital through professional fund managers, the RDIF seeks to bridge the critical funding gap for innovation. It aims to catalyse a financing ecosystem capable of converting India’s intellectual capital into globally competitive products and industries.
Risk capital: Need of the hour
The government has developed the RDIF through deep consultation and engagement with leaders across the innovation ecosystem, comprising technocrats, start-ups, private equity-venture capital funds, corporates, researchers, academia, etc. It aims to address a persistent challenge in India’s innovation landscape: the need for long-term risk capital that can support breakthroughs from lab to market.
India already has a vibrant base of entrepreneurs and a deep talent pool. What’s missing is capital aligned with the long cycles of innovation. The new fund addresses this by creating a professionally managed platform that empowers start-ups, incubators, research organisations, and large corporates to deploy resources into frontier technologies.
Bridging the valley of death
One of the fund’s critical strengths lies in its flexibility. While equity may be ideal for early-stage start-ups, concessional long-term debt becomes a powerful instrument for corporates investing in early R&D and intellectual property (IP) creation—areas where commercial lenders typically hesitate. These tailored financial instruments are tied together through a structured, impact-oriented framework with clear guardrails and robust governance.
Importantly, this is not just a long-term credit scheme as has been suggested in certain quarters. The government has committed 50-year anchor capital to the RDIF, which could get structured as a loan to an intermediate vehicle. However, the downstream deployment will happen through professional fund managers, using a combination of equity, venture debt, or hybrid instruments. It is, in essence, a market-aligned platform designed to address the diverse requirements of the industry.
The RDIF is designed to bridge the so-called “valley of death”—the stage between lab validation and commercial readiness, where many innovations falter due to lack of funding. By addressing this systemic bottleneck, it helps scale ideas that would otherwise fail to secure financing.
No silver bullet
This initiative is not occurring in isolation. India’s broader innovation strategy is beginning to take shape, with coordinated efforts across the supply and demand sides of the ecosystem. On the supply side, initiatives like the Anusandhan National Research Foundation (ANRF), IndiaAI, and the Semiconductor Mission are boosting R&D capacity through grants and institutional support.
On the demand side, industrial policy measures such as production-linked incentives, strategic procurement, and “Make in India” are creating a pull for indigenous technologies. The fund connects these ends—providing the financial bridge that can convert IP into GDP.
This means translating scientific and technological advances into real-world value—creating jobs, boosting exports, enhancing productivity, and achieving greater self-reliance. India has the potential to create world-class enterprises across six to seven strategic deep-tech areas, each capable of becoming $50-billion businesses. This can only happen with targeted investment across entire value chains—from core research to commercialisation.
The RDIF also offers a powerful platform to reconnect the global Indian community with the country’s innovation journey. There is immense expertise in AI, quantum, biotech, and other frontier technologies among Indians abroad. This platform can help channel that experience back into India—as mentors, co-investors, or collaborators—fostering reverse brain drain and stronger global partnerships.
Becoming a global innovation hub will take time, but with the right mix of patient capital, institutional backing, and private sector participation, India can build the foundation to lead in emerging technologies.
Scaling through the crowding in of capital
Structurally, the RDIF is expected to be housed within the ANRF and will operate as a mother fund. Capital will be allocated through specialised fund managers—venture capital funds, fund of funds, venture debt vehicles, and even corporate or institutional platforms—using a mix of financial instruments including equity, equity-linked debt, and corporate financing. This allows for scale and crowding in of both domestic and global capital.
From an institutional governance perspective, India is not starting from scratch. Over the last decade, the government has successfully established new-generation institutions like National Investment and Infrastructure Fund (NIIF), Indian National Space Promotion and Authorisation Centre (IN-SPACe), and Indian Semiconductor Mission (ISM) in areas ranging from infrastructure to spacetech and semiconductors. The learnings from these efforts—combining public purpose with private-sector efficiencies—will help ensure this new fund is managed with professionalism and transparency.
Fund managers selected by the platform will need to bring strong domain knowledge, a proven track record, and the ability to support companies beyond capital—through mentorship, syndication, and growth-stage support. These managers are not competing with each other, but are designed to complement one another across the capital stack while crowding in private capital.
A national platform for global innovation
This initiative is ultimately about building national capability. It positions India not just as a consumer of foreign innovation, but as a creator and exporter of transformative technologies. It enables the country to emerge as a trusted partner in global supply chains and as a serious contender in the deep-tech arena.
This is a strategic, co-created financial platform—aligned with national priorities and designed to scale science and innovation. If India is to lead in the technologies of the future, this fund could well be the bridge that makes it happen.