Examine how the RDI Scheme can address private-sector under-investment in R&D in India.

India's Gross Expenditure on R&D stands at only about 0.65% of GDP, and industry funds a mere 36.4% of it against 43.7% from the Central Government [1] — the inverse of the pattern in advanced economies. The ₹1 lakh crore Research, Development and Innovation (RDI) Scheme (Cabinet approval, 1 July 2025) is designed precisely to correct this financing failure [2].

Why private R&D stays low

• Long gestation, uncertain returns: deep-tech payoffs arrive after 10–15 years; venture capital seeks shorter exits.
• Absence of patient risk capital: banks lend against collateral, not against ideas at laboratory stage.
• Thin domestic demand in sunrise sectors — India's space economy is still only $8.4 billion, with nearly 400 start-ups awaiting scale [5].

How the Scheme responds

• Patient, cheap capital: long-tenor financing at low or nil interest, with concessional rates and repayment moratoria, lowers the cost of capital for risky research [2][3].
• Risk-sharing, not substitution: support is capped at about 50% of project cost, so firms retain skin in the game [3].
• Quasi-equity instruments: the ₹200 crore TDB–Agnikul Cosmos agreement uses Optionally Convertible Debentures to fund the Agnibaan reusable launch vehicle from TRL-4 to TRL-8 — bridging the "valley of death" between lab and market [4].
• Institutional architecture: strategic direction from the ANRF Governing Board, DST as nodal department, and second-level fund managers such as TDB and BIRAC, enabling sector-specific appraisal [2][3].

Limits to note

• Deployment risk: disbursal capacity and milestone-linked monitoring remain untested.
• Selection risk: direct company-level funding invites the charge of "picking winners" unless milestones are transparent.
• Crowding-in, not crowding-out, must be the test of success.

The RDI Scheme's real contribution is institutional: it converts the State from the principal spender on research into an underwriter of private risk. If milestone transparency and co-investment discipline hold, it can move India measurably towards the long-stated goal of R&D spending approaching 2% of GDP, strengthening self-reliance in strategic and sunrise technologies.