Why in the News
An investigation found that 15 of the 22 companies receiving the first round of assistance from the Research, Development and Innovation (RDI) Fund had investment links with members of the fund’s selection committee. The panel approved Rs 2,192 crore in soft loans, raising concerns over conflict of interest and transparency.
What is the Research, Development and Innovation (RDI) Fund?
- Definition: A Rs 1 lakh crore fund to support private sector research in strategic and deep tech sectors.
- Focus Areas: Artificial Intelligence, Quantum Technology, Space, Defence, Robotics, Clean Energy, Semiconductors and Digital Healthcare.
- Financial Support: Collateral free loans up to 50% of project cost, at 2 to 4% interest for up to 15 years.
- Custodian: Managed through a Special Purpose Fund under the Anusandhan National Research Foundation (ANRF).
- Fund Managers: Loans are disbursed through Second Level Fund Managers (SLFMs), currently the Technology Development Board (TDB) and Biotechnology Industry Research Assistance Council (BIRAC).
How are companies selected?
- Investment Committees: Each SLFM forms an independent investment committee to evaluate proposals.
- Composition: The TDB committee had 12 members, largely from private equity and technology, with one non voting government representative.
- Eligibility: Projects must have achieved at least Technology Readiness Level (TRL) 4, meaning laboratory validation is complete.
- Selection Criteria: Scientific, technological, financial and commercial viability, with decisions taken by majority vote.
What did the investigation reveal?
- Conflict Links: 15 of 22 beneficiaries had investment ties with 7 committee members.
- Funding Concentration: These firms received over Rs 1,377 crore of the total approved amount.
- Chairman’s Role: Nine selected firms were linked to the committee chairman, who reportedly also held a personal stake in one beneficiary.
- Committee’s Defence: Members stated that interests were disclosed and they recused themselves from related decisions.
- Governance Concern: The episode has renewed demands for stronger safeguards in the use of public funds.
Existing safeguards
- Mandatory disclosure of financial interests by committee members.
- Recusal from decisions involving associated companies.
- Background verification of applicants by fund managers.
- Expert driven selection to improve technical assessment.
- However, only two SLFMs currently operate the scheme, concentrating decision making and highlighting the need for greater transparency.
Back2Basics: Research, Development and Innovation (RDI) Fund
- Launched: 2025
- Corpus: Rs 1 lakh crore
- Nodal Framework: Operates under the Anusandhan National Research Foundation (ANRF)
- Objective: Provide long term, low cost financing for private sector research in deep tech and strategic sectors.
- Implementing Agencies: Technology Development Board (TDB) and Biotechnology Industry Research Assistance Council (BIRAC) as Second Level Fund Managers.
- Key Feature: Collateral free loans covering up to 50% of project cost through independent investment committees.