Funds awaited, Govt showpiece deep-tech initiative hits pause

Why in the News

The Technology Development Board (TDB), a statutory body under the Department of Science and Technology (DST), has stopped inviting funding applications after this month, citing “administrative reasons”. TDB is the only agency now selecting beneficiaries for the Research, Development and Innovation (RDI) Fund, and it has not received the money needed to make fresh offers.

What is the RDI Fund, and why was it created?

1. What it is: The RDI Fund lends to private firms and start-ups researching sunrise sectors such as quantum, space, robotics and artificial intelligence (AI). It is like a patient loan banks avoid.
2. Why it was created: The Government set it up in November 2025 to finance technologies seen as crucial for the economy’s growth and strategic independence.
3. Size and form: It promised Rs 1 lakh crore over six years, largely as low-cost, long-term loans. It sits under the Anusandhan National Research Foundation (ANRF), a statutory body under DST.
4. Co-funding rule: A soft loan covers up to half of a project’s cost, so the company must raise the rest from non-government sources.
5. The takeaway: The fund was meant to carry deep-tech firms from research to product, so a pause hits them when private money is scarcest.

How far has the fund got, and where has it stalled?

1. Custodian’s role: Only DST, the fund’s administrative custodian, can allot money to the agencies that pick borrowers.
2. First round: TDB’s Rs 2,000 crore ran out in April, when 22 companies were offered soft loans.
3. Beneficiaries: Approved firms include space ventures Agnikul Cosmos and GalaxEye, quantum start-up QuNu Labs, and robotics firms ideaForge and EndureAir.
4. Second round stuck: TDB finalised 13 more firms in August but has not issued their letters of intent, the formal offer that comes before a loan.
5. Money released: Nearly a year after launch, only the Rs 2,192 crore offered to first round firms has been made available.

Why is the fund falling behind?

1. Fund managers: Companies are chosen by agencies called Second Level Fund Managers (SLFMs). TDB and the Biotechnology Industry Research Assistance Council (BIRAC) under the Department of Biotechnology were nominated first.
2. Delayed private managers: Applications from private SLFMs closed in January and a committee finalised its recommendations in May, yet appointments are still pending.
3. BIRAC’s tax question: BIRAC, a non-profit company, has not begun selecting firms. Loans can convert into equity (a shareholding) earning taxable dividends, so BIRAC awaits a Finance Ministry tax ruling.
4. Conflict of interest: An August investigation found 15 first-round recipients had investment ties to seven selection committee members. The members said they had recused themselves from appraising those firms.
5. Target at risk: Industry expects the six-year target to be missed at this pace.

Challenges

1. Single-agency bottleneck: With the Biotechnology Industry Research Assistance Council (BIRAC) idle and no private Second Level Fund Managers (SLFMs), TDB alone picks borrowers, so a funding gap halts the scheme.
2. Opaque pause: The notice cites only “administrative reasons”, so applicants cannot plan.
3. Investor-linked selection: Committee members from the investment community can hold stakes in applicants, weakening trust.
4. Matching capital burden: Early-stage deep-tech start-ups struggle to raise the private half of project cost.

Way Forward

1. Scheduled releases: DST should release allocated money to selecting agencies on a fixed schedule tied to approved rounds.
2. Appoint private SLFMs: DST and ANRF should finalise the recommended private fund managers to spread the selection load.
3. Tax ruling: The Finance Ministry should settle how loan-to-equity conversion is taxed.
4. Disclosure norms: ANRF should publish committee members’ interests and recusals for every funding round.

Conclusion

The fund’s design is in place, but money and selecting agencies have not kept pace with applicants. Whether DST releases fresh money and private fund managers are appointed once invitations close will show if the flagship lending restarts.

Key numbers

1. DST allocation for the fund: Rs 23,000 crore (Rs 3,000 crore in last year’s Budget, Rs 20,000 crore this year).
2. Applications: over 300 companies applied; about 100 appraised; 35 selected so far.
3. Private SLFMs expected: 30 to 40 entities.

Back2Basics: Anusandhan National Research Foundation (ANRF)

1. Legal basis: Set up under the Anusandhan National Research Foundation Act, 2023.
2. Mandate: Funds and coordinates research across universities, laboratories and industry.
3. Governance: Its governing board is chaired by the Prime Minister.
4. Predecessor: It subsumed the Science and Engineering Research Board (SERB).

Matching Previous Year Question

“[2026] In what way(s) does the Vizhinjam International Seaport represent a structural shift in India’s maritime trade and logistics policy? 1. By functioning exclusively as a domestic cargo hub to reduce reliance on coastal shipping and eliminate the need for foreign collaborations. 2. By focusing primarily on passenger cruise tourism and heritage shipping to increase Kerala’s profile as a maritime heritage destination. 3. By leveraging its natural deep draft and strategic location to reduce dependence on foreign trans-shipment ports, enhance revenue retention, and reposition India in regional maritime trade. Select the answer using the code given below: (a) 1 only (b) 1 and 2 (c) 2 and 3 (d) 3 only Answer: D”