A $12B R&D fund was meant to turbocharge startup funding. It did the opposite

The Rs 1 lakh crore Research, Development, and Innovation (RDI) fund established by Prime Minister Narendra Modi in November 2025, aimed to provide funding for startups in research and innovation-focused sectors. Despite its lofty goals, the fund has had the opposite effect, slowing down funding in the startup ecosystem rather than accelerating it.

According to the managing partner of a VC firm with over $1 billion under management, the RDI fund has failed to deliver on its promise. Alternative investment funds (AIFs) and two non-banks approached by The Ken expressed similar sentiments. The fund, overseen by the Anusandhan National Research Foundation (ANRF), was intended to support sectors with long development cycles, including DNA-based data storage, drone-defence systems, and satellite technologies.

The initial timeline was set for rapid implementation, with the first cheques expected to be issued "in the coming days." However, reality has proven otherwise. An RF (request for proposals) process that was supposed to be swift has been dragged out, causing significant delays. As of August, over 20 additional fund managers were still awaiting appointment, and the funding cycle was estimated to be delayed by nearly a year.

The fund's initial allocation of Rs 20,000 crore for the financial year 2026 was later reduced to Rs 3,000 crore. Out of this, only Rs 500 crore has been disbursed to the Technology Development Board (TDB) for supporting 22 startups. Biotechnology Industry Research Assistance Council (BIRAC) has committed Rs 390 crore to eight startups, but still awaits funds from ANRF.

Despite these challenges, the fund's proponents emphasize the importance of investing in research and innovation for India's future.