Centre issues draft rules for utilising Rs 1 trillion on R&D, innovation

Days after Prime Minister Narendra Modi announced the Rs 1 trillion research, development and innovation scheme (RDI) to boost private sector-led innovation, the Union Ministry of Science and Technology has issued draft regulations in this regard.

The government aims to mobilise private investments in the R&D sector and increase the total investment from 0.65 percent (at present) to more than 1 percent, against the world average of 2.7 percent.

According to the draft regulations, at the primary level, a Special Purpose Fund (SPF) -- referred to as the RDI Fund -- has been established within the Anusandhan National Research Foundation (ANRF).

The fund will serve as the custodian of the Rs 1 trillion corpus. It will appoint second-level fund managers such as the alternative investment funds, development finance institutions or the non-banking finance companies.

The second-level fund managers will, in-turn, provide financing to the private sector in the form of long-term, low interest loans or equity options. Recognising the critical role of the private sector in driving innovation and commercialising research, the RDI Scheme will provide long-term financing or refinancing support with extended tenures at low or nil interest rates.

The regulations suggest financing under the scheme can cover up to 50 percent of the assessed project cost for transformative RDI projects at technology readiness levels and above. However, grant financing and short-term loan will not be granted under the scheme.

“Innovation and R&D remain essential to India’s economic security, strategic purpose and self-reliance. To retain strategic autonomy and competitiveness, India must rank amongst the top three to five countries in terms of RDI in at least five to 10 of our chosen technology areas,” said the draft regulations document.