ETtech Explainer: Understanding the $11 billion RDIF Fund of the Government

India launches ₹1 lakh crore RDIF to boost deeptech and innovation

India has rolled out a ₹1 lakh crore (around $11 billion) Research, Development and Innovation Fund (RDIF) to support deeptech and science-based innovation. Unlike traditional government grant schemes, the RDIF is structured as a long-term risk capital fund with a 50-year horizon, aimed at backing high-risk research and preventing valuable intellectual property from moving overseas.

The fund is designed on the lines of global sovereign investment models such as Singapore’s Temasek, China’s CIC, Norway’s NBIM and the UAE’s ADIA, but with a specific focus on India’s innovation ecosystem.

How the RDIF will work

The RDIF will operate through a two-tier structure with limited government interference.
At the top level, a special purpose fund under the Anusandhan National Research Foundation (ANRF) will act as the custodian of capital.

At the second level, the money will be deployed through private alternative investment funds, NBFCs and public institutions such as the Biotechnology Industry Research Assistance Council (BIRAC) and the Technology Development Board.

The government plans to deploy the ₹1 lakh crore corpus over six years, beginning with an allocation of ₹20,000 crore in FY26. Applications from fund managers for the first round close on January 15, while actual capital deployment is expected to begin around April–May 2026.

Focus on deeptech and high-risk innovation

The RDIF will support sectors such as:

• Energy transition
• Climate technologies
• Quantum computing
• Robotics
• Space
• Artificial intelligence
• Biotechnology

These areas typically face funding shortages because failure rates between early research and commercial scale can reach up to 95%. The fund aims to bridge this “valley of death” by supporting projects at Technology Readiness Level (TRL) 4 and above, where products move from labs toward commercialisation.

According to Murali Krishna Gunturu, partner at Inflexor Ventures, the fund could significantly increase capital available for foundational research in India. He said India has long suffered from a lack of patient, risk-tolerant capital compared to ecosystems like Silicon Valley or China.

India’s R&D spending remains low

India currently spends only 0.64% of its GDP on research and development, far below the global average of 2.7%. The private sector contributes just 36.4% of total R&D spending, highlighting the need for structured long-term funding.

Can RDIF become India’s Temasek?

Global sovereign funds have succeeded by operating with discipline and long-term autonomy.

• Temasek built national champions through long-term investments
• Norway’s NBIM reinvested returns to grow national wealth
• China’s CIC absorbed early risks to help strategic sectors scale

Experts say RDIF could follow a similar path if it is allowed to operate independently, tolerate early losses, and remain stable across political cycles. However, since RDIF is funded through the national budget, its performance will face greater public and political scrutiny.

Concerns from investors

Some investors have raised concerns that funds with limited experience in science-led investing may rebrand themselves as “deeptech” just to access RDIF capital. Experts stress that deeptech must involve genuine, IP-led and science-heavy innovation, not just technology-driven consumer startups.

Another concern is the fund’s structure, which allows RDIF to contribute up to 50% of a fund’s corpus. Some investors believe this share should be closer to 20%, allowing more participation from global and domestic investors.

According to Sateesh Andra of Endiya Partners, it may take 1–2 years for fundraising to stabilise and 5–7 years for the full economic impact to become visible. Historically, every dollar of government capital can generate an 8–10 times multiplier effect in the broader ecosystem.

India’s other sovereign-style fund

India already operates a quasi-sovereign fund, the National Investment and Infrastructure Fund (NIIF), launched in 2015. It currently manages over $4.9 billion in assets and has invested in companies such as Manipal Hospitals, Ather Energy, FirstCry and Licious.