India’s Rs 1 lakh crore RDI fund, designed to fast-track deep tech, has instead delayed startup funding cycles by 12 months. Meant to provide patient capital for long-gestation R&D, it’s now causing private AIFs to renegotiate with their limited partners. This bottleneck impacts over 160 AIFs and 38 other funds that applied for RDI allocation in January.
How We Got Here
Prime Minister Narendra Modi launched the Rs 1 lakh crore Research, Development, and Innovation (RDI) fund in November 2025. Its goal was to inject patient capital into deep tech sectors like DNA data storage and drone defense, areas private VCs often avoid due to long gestation periods.
The Numbers
- Out of 162 AIFs and 38 Fund of Funds (FROs) that applied in January, only the Technology Development Board (TDB) and BIRAC have received approval letters.
- The fund's FY26 allocation of Rs 20,000 crore was slashed to Rs 3,000 crore for disbursement.
- The Anusandhan National Research Foundation (ANRF), which houses the RDI fund, has disbursed only Rs 500 crore to TDB.
- Biotechnology Industry Research Assistance Council (BIRAC) has committed Rs 390 crore to eight startups without receiving any funds from ANRF.
- TDB and BIRAC have collectively committed Rs 2,500 crore to just 30 startups under the fund so far.
What Happens Next
🇮🇳 Why This Matters for India
Deep tech founders in Bengaluru and Hyderabad working on capital-intensive R&D projects now face prolonged fundraising timelines, potentially stifling early-stage innovation.
The Take
This fund, despite good intentions, is a clear example of bureaucratic friction killing the very "patient capital" it was designed to deliver. Expect this to further push deep tech founders towards international grants or private sector initiatives, bypassing government channels for real capital.
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